10 Best Debt Consolidation Loans (and How To Get One in 2024)

If you’re dealing with high-interest payday loans or credit card debt, debt consolidation can make repayment easier with a lower interest rate and a single monthly payment.

In 2024, Americans have an average personal debt of $22,713, excluding mortgages. When a large portion of this debt is at a high interest rate, it becomes even more important to pay it off as soon as possible.

Borrowing a debt consolidation loan at a significantly lower interest rate can be a very effective way to achieve this. However, before you apply for a loan, it’s important to learn more about how it works, how to qualify, and the pros and cons of doing so. Consider our top 10 recommendations for the best debt consolidation loans you can get in 2024.

10 Best Debt Consolidation Loans

We analyzed 30 consolidation loans based on a number of factors, such as minimum credit score requirements, annual percentage rates (APRs), loan amounts, repayment terms, and customer reviews to select the ten best loans to consolidate debt.

1. Reach Financial: Best for Flexible Payment Dates

• Loan Amounts: $3,500 to $40,000
• APR: 5.99% to 35.99%
• Loan Terms: 24 to 60 months
• Minimum Credit Score: Not specified

Reach Financial specializes in credit card refinancing and loan consolidation. Reach Financial is our top choice with low minimum APRs and fast funding, usually within 24 hours.

Pros

• Lowest minimum APR, compared to other debt consolidation lenders
• Flexibility to change payment due date
• Loan funds can be sent directly to your lenders

Cons

• No mobile app
• The website doesn’t specify minimum credit score requirements
• You may have to pay an origination fee of up to 8%

2. LightStream: Best for Same-Day Loans

• Loan Amounts: $5,000 to $100,000
• APR: 6.99% to 25.49%
• Loan Terms: 24 to 84 months
• Minimum Credit Score: Not Specified

LightStream debt consolidation loans have zero fees. The lender may also match or even beat competitors’ interest rates if you find a lower APR. However, LightStream doesn’t specify its minimum credit score requirements, and you can’t prequalify for a personal loan to check your rates. You’ll usually get funds in your checking account within one business day.

Pros

• Same-day loans in many cases
• Low interest rate, compared to most lenders
• May beat competitors’ interest rates
• No loan origination fees

Cons

• Doesn’t specify minimum credit score requirements
• No option to prequalify for loans before applying

3. Upstart: Best for Bad Credit Borrowers

• Loan Amounts: $1,000 to $50,000
• APR: 7.80% to 35.99%
• Loan Terms: 36 or 60 months, only
• Minimum Credit Score: 300

Getting a debt consolidation loan when you have bad credit isn’t easy. However, with a minimum credit score requirement of just 300, Upstart is a great choice. You may even qualify for a loan to consolidate debts even if you have no credit history at all. Upstart charges an origination fee of up to 12% of the loan amount for their loans. This one-time, non-refundable fee is automatically deducted from the loan before it's delivered to the borrower.

Pros

• Quick approvals
• Low minimum credit score requirements
• Offers grace period of 15 days for late payments

Cons

• Only two loan terms to choose from
• May charge a loan origination fee of up to 12%
• APRs can be high for borrowers with bad credit
• No joint loan options

4. Discover: Best for Direct Payments to Lenders

• Loan Amounts: $2,500 to $40,000
• APR: 7.99% to 24.99%
• Loan Terms: 36 to 84 months
• Minimum Credit Score: 720

Discover can pay your lenders directly when you borrow a consolidation loan, which can be quite convenient. There are no added fees, such as origination fees, prepayment penalties, or application fees with Discover. You’ll also have a mobile app to manage your loan easily. However, you’ll need a good credit score of at least 720 to qualify.

Pros

• Easy-to-use mobile app
• Pays your lenders directly
• No prepayment, application, or origination fees

Cons

• No joint loan options
• High credit score requirements compared to other debt consolidation lenders
• Hefty late payment fee of $39

5. Upgrade: Best for Smaller Debts

• Loan Amounts: $1,000 to $50,000
• APR: 8.49% to 35.99%
• Loan Terms: 24 to 84 months
• Minimum Credit Score: 580

Upgrade is one of the few lenders that offers loan amounts as low as $1,000. A consolidation loan from Upgrade can be a good option for those who want to consolidate smaller debts. While the APR is not the lowest on this list, it’s geared towards borrowers with fair credit or better.

Pros

• Lower minimum loan amounts
• User-friendly mobile app
• Quick funding

Cons

• Origination fees of up to 9.99%
• Doesn’t offer the most competitive rates for borrowers with good credit

6. SoFi: Best for Higher Loan Amounts

• Loan Amounts: $5,000 to $100,000
• APR: 8.99% to 29.99%
• Loan Terms: 24 to 84 months
• Minimum Credit Score: 680

SoFi debt consolidation comes with rate discounts if you opt for direct payments to your lenders. There are other perks of borrowing from this lender, such as same-day funding and joint loans with a co-applicant if you don’t have good credit. However, you may have to pay an origination fee to qualify for the lowest rates.

Pros

• Rate discounts for direct payments to lenders
• Offers joint loans
• Same-day funding
• Larger loan amounts

Cons

• You’ll need good credit to qualify
• May have to pay an origination fee for the lowest rates

7. Achieve: Best for Rate Discounts

• Loan Amounts: $5,000 to $50,000
• APR: 8.99% to 35.99%
• Loan Terms: 24 to 60 months
• Minimum Credit Score: 620

Achieve offers you a number of ways to reduce your APR through rate discounts, such as if you apply for a joint loan and use at least half of the loan proceeds to pay off debts. However, you’ll need to pay an origination fee of up to 6.99%.

Pros

• Multiple rate discounts
• Direct payment to creditors
• Same day funding if application is submitted early in the day
• Joint loans available

Cons

• Origination fees of up to 6.99%
• Not available in all states

8. Best Egg: Best for High-Income Earners

• Loan Amounts: $2,000 to $50,000
• APR: 8.99% to 35.99%
• Loan Terms: 36 to 60 months
• Minimum Credit Score: 600

While you can get a debt consolidation loan from Best Egg with a relatively low credit score of 600, you can qualify for the lowest rates if you have a credit score of at least 700 and an annual income of $100,000 or more. However, you’ll still need to pay an origination fee to receive your loan, when you’re approved.

Pros

• Better rates for high-income, good-credit borrowers
• Rate discounts for direct payment to creditors
• Flexible due dates

Cons

• Origination fees of up to 9.99%
• Best rates are only available to good credit borrowers
• No joint loans

9. Prosper: Best for Easy Qualification

• Loan Amounts: $2,000 to $50,000
• APR: 8.99% to 35.99%
• Loan Terms: 24 to 60 months
• Minimum Credit Score: 600

Prosper is a peer-to-peer (P2P) lender that connects you with investors. This means that consolidation loans are easier to qualify for, even if you have poor credit. However, due to the source of the funds (other people, not a bank or financial firm), loan funding can take longer than other options on this list.

Pros

• Easier to qualify for
• Joint loans are available
• Lower minimum credit score requirements

Cons

• Origination fees of up to 9.99%
• Funding can take up to 14 days

10. Avant: Best for Mobile App

• Loan Amounts: $2,000 to $35,000
• APR: 9.95% to 35.99%
• Loan Terms: 24 to 60 months
• Minimum Credit Score: 580

Avant has a relatively low minimum credit score requirement of 580, which makes it easier to qualify for. Once qualified, you can use a mobile app to manage your loan. Another benefit of an Avant debt consolidation loan is that there’s no prepayment penalty if you want to pay off the loan sooner.

Pros

• Convenient mobile app to manage loan
• Lower minimum credit score requirements
• Quick funding (loans are typically approved within one day and deposited to your bank account the next day)

Cons

• No joint loans
• Origination fees of up to 9.99%

What are Debt Consolidation Loans, and How Do They Work?

A debt consolidation loan combines one or more unsecured debts into a single new loan to obtain a lower interest rate and a lower fixed monthly payment. If you have a lot of high-interest debts and credit cards, a consolidation loan at a lower rate can help you save thousands of dollars. You can consolidate many types of debt, such as credit cards, personal loans, title loans, and payday loans. 

Secured loans, such as mortgage loans and automobile loans, are typically not eligible, because the collateral is tied to the loan.  For secured loans, it is best to refinance the loan itself, to obtain a lower interest rate and/or a shorter/longer loan term.

Once you decide which debts you want to consolidate, you can apply for a loan at a bank, credit union, or online lender. Next, the lender will review your application and make a decision. Once your loan is approved, the loan funds can be sent directly to your lenders, for easy administration of your existing loans’ payoffs. You’ll then have a single payment each month until you pay off your consolidation loan.

If it's no longer the right fit for your financial situation, you can cancel your debt consolidation program, though it may be complicated depending on your contract's terms. Be sure to thoroughly review your agreement for any penalties or fees before moving forward with the cancellation process.

Pros and Cons of Debt Consolidation Loans

While debt consolidation can help you save a considerable amount of money if you qualify for a lower rate, it may not be the right form of debt relief for everyone. Consider these pros and cons to make an informed decision.

Pros

• You’ll have a single payment each month, instead of paying off several lenders with different payment due dates each month.
• You’ll have a fixed rate, unlike credit cards, which tend to carry variable rates, based on an interest rate index such as the Prime Rate, the current LIBOR rate, which can move up or down as frequently as every three months.
• Your loan will usually have a fixed term (of 2 to 5 years), so you will have a known payoff date for your loan.
• Some lenders may offer rate discounts for autopay or direct payment to lenders.
• If you qualify for a lower rate on your debt consolidation loan, you may be able to save a considerable amount of money on your total debts.
• Your new payment may be lower than all your existing debt payments put together.
• Your credit score may improve over time if you make timely payments.

Cons

• It may not be easy to qualify for a consolidation loan amount that is necessary to pay off all your debts, if you don’t have sufficient income to support your loan payments.
• You may not qualify for a lower rate if your credit score is low (less than 580).
• Many loans come with origination fees and prepayment penalties, which may drive up the total cost of the loan.
• You may end up in a worse financial position if you continue to put new charges on the credit cards you just paid off, using your debt consolidation loan.
• You may not be able to save much in total interest paid over the life of the loan if you choose a longer repayment term, even if your fixed rate consolidation loan is at a lower APR, because you will pay interest for a longer period of time vs keeping your existing loans.

Who Qualifies for a Debt Consolidation Loan?

Eligibility requirements for debt consolidation loans vary by lender. However, you’ll generally need to meet these common requirements to get approved for a loan:

• Have a fair to good credit score (of at least 580).
• Have a debt-to-income ratio of less than 45%.
• Be at least 18 years old
• Have a stable source of income.

Keep in mind that some lenders have more relaxed underwriting guidelines, so they may approve your loan application even with a higher DTI or lower credit score. However, you’ll likely pay a higher interest rate from these lenders.

How To Boost Your Chances of Approval?

If you’re planning to apply for a debt consolidation loan, there are a number of steps you can take to improve your chances of approval. Here are a few tips to consider:

• Check your credit scores with all three of the major credit reporting bureaus (Experian, TransUnion, and Equifax) to determine whether you’re likely to get approved for a loan.
• Pay your bills on time to improve your credit score.
• Consider paying down some of your debts if you have a high DTI ratio.
• Shop around and compare multiple lenders' repayment terms, loan amounts, and interest rates.
• Consider applying for a secured loan by offering an asset as collateral. Keep in mind that the lender can seize your asset if you default on the loan.
• If you have someone you can ask, apply for your loan with a co-applicant (or co-signer) who has good credit and a consistent income, in order to boost your chances of approval and qualify for a lower rate.

When Is Debt Consolidation a Good Idea?

Debt consolidation is not the right option in every scenario. It’s typically a good idea in some situations, such as:

• If you are trying to simplify repayment by rolling multiple bills into a single monthly payment
• If you want to lower the amount of interest you’re paying on high-interest debts like credit cards and payday loan consolidations
• If you qualify for a consolidation loan at a lower rate compared to the weighted-average interest rate you’re currently paying on your current debts
• If you can afford the monthly payments on the new loan

Alternatives To Debt Consolidation Loans

If you don’t think a debt consolidation loan is right for you, there are other alternatives to consider:

• Balance Transfer: If you have excellent credit, you may qualify for a 0% APR balance transfer credit card. You can save thousands of dollars in interest if you pay off your balance within the introductory period.
• Home Equity: If you’re a homeowner with significant equity, you may be able to use a home equity line of credit (HELOC), cash-out refinance, or home equity loan to pay off your debts. However, you risk losing your home if you default on the loan.
• Debt Management Plan: Debt management plans (DMPs) are a form of debt administration and consolidation offered by credit counseling agencies. This is a good option if you have bad credit since it doesn’t involve taking out a new loan as a part of the process.
• Debt Settlement: Debt settlement involves negotiating with your lenders to settle your account for less than you owe. This is a good option if you have bad credit and are already behind on your payments.

How To Get a Debt Consolidation Loan

If you have several high-interest debts, a debt consolidation loan at a lower rate can help you save a considerable amount of money. However, it’s always best to consider other alternatives to decide if it’s the right debt-relief option for your financial situation.

If consolidating your debts is the right option, here are the next steps to follow:

1. Make a list of all your current debts and credit card balances to determine how much you need to borrow.
2. Take a look at your budget to determine if you can afford the new monthly payment amount, based on the likely term (24-60 months) of your loan and the expected interest rate you’ll likely qualify for.
3. Shop around and compare consolidation options from banks, credit unions, and online lenders. Compare the rates, fees, loan amounts, and repayment periods.
4. Read the online reviews of different lenders.
5. Prequalify to check the rates you qualify for.
6. Use a debt consolidation calculator to estimate how much you’ll be able to save in total interest.
7. Gather your documents and fill out an application form to apply for the loan.
8. Wait for the lender to evaluate your creditworthiness and approve your loan.
9. Review your loan agreement and sign it to receive the loan funds in your bank account, or you can have your new lender distribute payments to your current lender(s), to pay off your account(s).