Why You Should Trust Us: Our Methodology for Rating Debt Consolidation Loans
To find the best places to consolidate debt, we combed through the fine print and terms of about a dozen personal loans to find the ones that were best suited to help with consolidating debt. We considered four main features:
- APR range: For the most help with debt payoff, the best personal loan for debt consolidation needs to have lower interest rates than the credit card or other debts you're consolidating. We looked for the loans that had the lowest rates possible for each credit range and purpose. The average credit card interest rate was 21.76% in the third quarter of 2024, so we focused on loans that had the potential to beat this.
- Appropriate loan amounts: We looked for personal loans that had the most variety in loan amounts. To benefit the most borrowers, we included personal loans with maximum limits over $10,000.
- Minimum credit score requirements: Where available, we considered the minimum credit score requirements for each company. We considered the best debt consolidation loans for excellent, fair, and poor credit, grouping loans into categories based on these credit score requirements.
- Fees: We considered fees like origination fees or administrative fees in our decisions, looking for loans with the fewest or lowest fees. None of the best loans listed have prepayment penalties.
- Nationwide availability: We only considered loans with availability in most or all 50 US states.
See our ratings methodology for personal loans »
At Business Insider, our reviews are guided by editorial independence, meaning our recommendations and ratings are based on objective criteria, thorough research, and expert analysis. Advertisers do not dictate our content, ensuring our reviews remain transparent and unbiased.
We rate all personal loan products in our reviews and guides on a 1-5 scale. The overall rating is a weighted average that takes into account seven different categories, some of which are judged more heavily than others based on what we think is most important.
How We Review Debt Consolidation Loans
We consulted loan and financial planning experts to inform these picks and give their insights into finding the best loans for your needs. You can read their advice at the bottom of this post.
- Andre Jean-Pierre, senior wealth advisor and managing director at Aces Advisors
- Forrest McCall, founder of Don't Work Another Day
- Fred Winchar, CEO and co-founder at MaxCash
- Ryan Wangman, personal loans reporter
Generally, What Makes a Personal Loan Good or Not Good?
Andre Jean-Pierre:
"One of the most important factors to consider in a personal loan is the interest rate. Because personal loans are typically unsecured, they usually carry higher interest rates than secured lending options. However, if a person has a strong credit profile, a personal loan can carry a lower APR than other unsecured sources of financing such as credit cards."
Forrest McCall:
"One of the best ways to use a personal loan is to pay off other high-interest debts like credit card debts. Because you can often lock in lower rates than a revolving line of credit like a credit card it can be a smart decision for your finances and save you thousands in interest payments over time."
How Should a Borrower Decide if They Should Take Out a Personal Loan?
Fred Winchar:
"Whether or not to take a personal loan depends on if one can afford it. The purpose of the loan and the value that comes with it is of importance to note. In most cases, it is beneficial to use the loan to invest in a project that can bring extra income or savings."
Ryan Wangman:
"Borrowers should carefully consider alternatives to personal loans before taking one out. Personal loans can come with high interest rates, especially for borrowers with poor credit. If you can't fit those monthly payments into your budget, steer clear of the loan."
Debt consolidation is when you take out one loan and use it to pay off other debts that you have, leaving you with one monthly payment and interest rate. This can help you manage your debt more efficiently, and, in some cases, reduce the total amount of interest you'll pay if the new loan's APR is lower.
Generally, you'll need a personal loan for debt consolidation, which means replacing multiple loans with a single loan instead. Business Insider's personal finance experts chose the best debt consolidation loans and we highlight their features below.
Best Debt Consolidation Loans of May 2025
- Best for good to excellent credit: LightStream Personal Loan
- Best for fast funding: Upgrade Personal Loan
- Best for high balances: SoFi® Personal Loan
- Best for bad credit: Avant Personal Loan
- Best for fair credit: Payoff Loan™
- Best for limited credit history: Upstart Personal Loan
Apply for Debt Consolidation Loan Offers Online
Best for Good to Excellent Credit
6.49% to 25.29% (with AutoPay discount, rates vary by loan purpose)
$5,000 to $100,000
660
Pros
Cons
LightStream offers some of the lowest rates on personal loans out there, provided you have a great credit score. The lender also has loans of up to $100,000 and can supply you with funding on the same day you apply and are approved.
LightStream Personal Loan- Loan amounts range from $5,000 to $100,000
- Loan term lengths range from 2 to 12 years
- Apply online and you'll receive a response shortly during business hours.
- Receive your funds as soon as the same day
- Loans are made by Truist Bank, member FDIC
Lightstream is a highly regarded lender for many loan types, and has been a top pick across Business Insider's coverage of the best personal loans. However, this lender only works with borrowers with good or better credit, with a minimum credit score requirement of 660.
LightStream Personal Loan offers consistently low debt consolidation loan rates, though its minimum interest rate for debt consolidation is higher than its typical personal loan's interest rates. However, this lender does not have any prepayment or origination fees. Same-day funding is available with LightStream.
Although Lighstream offers high maximum loan amount limits, only borrowers with excellent credit can borrow the $100,000 maximum, and anyone without excellent credit may not qualify for the full amount.
LightStream defines excellent credit as an account with five or more years of credit history, stable and sufficient income for debts, and a variety of credit history with little or no credit card debt. If you're looking for one of the best places to consolidate debt, chances are you have a significant amount of debt, and may not fit these qualifications.
Additionally, LightStream doesn't have a way to pre-qualify online. You'll have to apply for the loan to find out exactly what your rates and terms could look like, which could make comparison shopping difficult.
Best for Fast Funding
9.99% to 35.99%
$1,000 to $50,000
580
Pros
Cons
Upgrade is a solid lender if you can qualify for its lowest interest rate. But if your credit isn't in great shape, you may be able to find a better deal elsewhere.
Upgrade Personal Loan- Loan amounts range from $1,000 to $50,000
- Loan term lengths range between 2 to 7 years
- You can get your money within one business day after your loan is reviewed and approved
- Loans made by Upgrade's lending partners
Upgrade Personal Loan is one of the best companies to consolidate debt because it is great for fast cash. This lender allows you to get your money within one business day after your loan is reviewed and approved.
You're also able to get a loan for as little as $1,000, which is less than many of the other competitors on our list. It could be a good choice if you only have a small amount of debt you need to consolidate.
Be aware that Upgrade does charges origination and late fees that could impact your loan consolidation rates. You could pay a late fee of up to $10 if you don't make a full payment within 15 days of your due date.
Best for High Balances
8.74% to 35.49% fixed (with all discounts)
$5,000 to $100,000
680
Pros
Cons
SoFi is a strong personal loan lender for those with high credit scores — you'll get perks like no fees required. The best personal loan for you depends on your credit score, which will determine what you qualify for and can lower your rate.
SoFi- Loan amounts range from $5,000 to $100,000
- Loan term lengths range from 2 to 7 years
- Usually receive your money in a few business days after your application is approved
- Loans are made by SoFi Lending Corp.
SoFi® Personal Loan offers loan amounts of $5,000 to $100,000, making it our top pick for debt consolidation for high balances. SoFi loan rates are comparable to those offered by LightStream, the other lender on this list offering loans up to $100,000. However, SoFi sets itself apart by offering an online prequalification process that allows those with existing debt to understand their loan options before agreeing to a hard credit pull.
SoFi loans are best suited for those with good to excellent credit, with SoFi reporting that the average weighted income among borrowers is over $100,000.
Best for Bad Credit
9.95% to 35.99%
$2,000 to $35,000
600
Pros
Cons
Avant Personal Loan is a good personal loan provider, especially if you have a lower credit score and need to receive your loan money quickly. Just be prepared to pay a high APR if you do have a low score.
Avant- Loan amounts range from $2,000 to $35,000
- Loan term lengths range between 2 to 5 years
- Administration fee of up to 4.75%, which will be deducted from your loan proceeds when the loan is funded, and late fee that varies by state
- Loans made by WebBank, member FDIC
Getting a loan with bad credit, whether to consolidate debt or for something else, can be expensive, or hard to qualify for. An Avant Personal Loan is the best bet for borrowers with poor credit, requiring a minimum credit score of 600.
Compared with other personal loan lenders offering debt consolidation loans for bad credit borrowers, Avant's terms are the most generous. While there is an administration fee, it could be lower than competitors' fees with a cap up to 4.75% in administration fees with an undisclosed late fee and returned payment fee. Avant also has the advantage of offering fast personal loan funding.
While Avant is accessible to borrowers with poor credit scores, approval might go hand in hand with high interest rates on your loan. Additionally, borrowers may face origination fees and limited loan amounts compared to other lenders.
Best for Fair Credit
11.72% - 17.99% fixed
$5,000 to $40,000
640
Pros
Cons
A Happy Money Payoff Loan personal loan is a great option for those with good credit scores who are eligible for the lender's lowest APR. However, borrowers can only use the funds to consolidate credit card debt.
Happy Money Payoff Loan™- Loan amounts range from $5,000 to $40,000
- Loan term lengths range between 2 to 5 years
- Origination fee anywhere between 0% and 5%
- Won't be able to get a loan from Happy Money if you live in Maine, Massachusetts, Nebraska, or Nevada
- Can only use for credit card debt consolidation
- Loans made by one of Payoff's lending partners
In the fair credit range, it can be tough to qualify for a personal loan with reasonable interest rates — many lenders have a minimum of 660 or 680. However, a Payoff Loan™ could be a good option for people with credit scores as low as 640. Interest rates are comparable to those offered by LightStream and SoFi, but this lender has less stringent requirements.
Compared with competitors Prosper and Best Egg, which both have the same 640 minimum credit score requirement, Payoff's interest rates are capped lower, and could have lower origination fees.
Payoff offers loans with a 0% to 5% origination fee. Competing lenders Prosper and Best Egg charge 1.00% to 9.99% and 0.99% and 9.99% origination fees, respectively. The better debt consolidation rates will depend on your credit score, income, and repayment term.
Best for Limited Credit History
6.60% to 35.99% fixed
$1,000 to $50,000 (borrowers in four states are subject to higher minimum loan amounts: Massachusetts: $7,000, Ohio: $6,000, New Mexico: $5,100, Georgia: $3,100)
300
Pros
Cons
Upstart could be the right lender if you have a strong work and education history, but you have a low credit score or limited credit history. The best personal loan for you depends on your credit score, which will determine what you qualify for and can lower your rate.
Upstart- Loan amounts range from $1,000 to $50,000. However, borrowers in four states are subject to higher minimum loan amounts: Massachusetts: $7,000, Ohio: $6,000, New Mexico: $5,100, Georgia: $3,100
- Loan term lengths are either 3 or 5 years
- Can have origination fees up to 8%
- Considers employment and education history when making loan approval decisions
- Loans are made through one of several Upstart-powered bank partners
Upstart Personal Loan is a top choice for borrowers with limited credit history because it evaluates more than just credit scores when determining loan eligibility. Upstart assesses factors such as work experience and education, making it easier for individuals with low or no credit scores to qualify.
With a minimum credit score requirement of just 300, Upstart offers accessibility that many other lenders do not, making it an attractive option for those who are building or rebuilding their credit. Another key advantage of Upstart is its quick funding process, allowing borrowers to receive funds as soon as the next business day if approved by 5 p.m. ET.
While Upstart's flexible qualification criteria make it appealing, it does come with higher costs, including origination fees of up to 12% and APRs of 6.60% to 35.99% fixed. Additionally, the lack of co-signer options may limit borrowing opportunities for some applicants.
Compare Today's Debt Consolidation Rates
Debt Consolidation Loan Company Trustworthiness
The BBB measures businesses based on factors like their responsiveness to customer complaints, honesty in advertising, and transparency about business practices.
We've compared each institution's Better Business Bureau score to give you another piece of information to choose your lender. Whether you're considering a $5,000 loan or a $10,000 loan, a trustworthy lender can improve your loan experience.
Here is each company's score:
| Lender | BBB Grade |
| Upstart Personal Loan | A+ |
| LightStream Personal Loan | A |
| Sofi Personal Loan | A+ |
| Payoff Personal Loan™ | A |
| Avant Personal Loan | A+ |
| Upgrade Personal Loan | A+ |
All of our top picks are rated A or higher by the BBB. Keep in mind that a high BBB score does not guarantee a positive relationship with a lender, and that you should continue to do research and talk to others who have used the company to get the most complete information possible.
What Is a Debt Consolidation Loan?
Debt consolidation takes a group of different debts you owe and turns them into one monthly payment.
For example, let's say you have a few credit cards, all carrying a balance. You're tasked every month with making several payments, each at different amounts, with different due dates and different interest rates. It can be a lot to manage. Credit card debt consolidation can help make your payments and monthly bills more manageable by condensing your debt into one simple payment.
How Debt Consolidation Works
Debt consolidation works by combining multiple debts into a single loan, making repayment more manageable. A borrower takes out a new loan and uses the funds to pay off existing debts, such as credit cards, medical bills, or personal loans. Instead of juggling multiple payments with varying interest rates, the borrower makes one fixed monthly payment on the new loan.
In some cases, you may be able to save money on interest if your loan's interest rate is lower than the APR on your debts. With a structured repayment schedule, borrowers can stay on track to pay off their debt within a set timeframe. Additionally, making consistent, on-time payments can improve your credit score.
Benefits of Consolidating Debt with a Loan
- Simplified payments. One monthly payment instead of managing multiple due dates.
- Lower interest rates. May reduce overall interest costs if the new loan has a lower rate.
- Faster debt payoff. Structured repayment terms can help borrowers become debt-free sooner.
- Improved credit score. Timely payments and a lower credit utilization ratio can boost credit scores.
Types of Loans Used for Debt Consolidation
- Balance Transfer Credit Cards: Offer a 0% APR introductory period for transferring high-interest credit card debt.
- Home Equity Loan or HELOC: Use home equity as collateral for lower interest rates.
- Unsecured Personal Loan (Debt Consolidation Loan): A fixed-term loan without collateral, based on creditworthiness.
- 401(k) Loan: Borrow from a retirement account, with repayment typically through payroll deductions.
How to Qualify for a Debt Consolidation Loan
Qualifying for a debt consolidation loan is the same as it is for most other kinds of personal loans.
Generally, lenders require a credit score in the mid-600s, although some will accept borrowers with lower scores. Remember, though, that with a lower credit score, you'll pay a higher interest rate.
In addition to checking your credit score, debt consolidation companies will also need proof of your employment and ability to repay in order to determine eligibility. They will also check your debt-to-income ratio to make sure you haven't borrowed more than you can feasibly pay back.
Most lenders will allow you to prequalify for a loan, which allows you to compare interest rates and terms without affecting your credit score.
Pros and Cons of Debt Consolidation Loans
Advantages of Debt Consolidation
- Simplifies payments. Instead of juggling multiple bills, you make one monthly payment, reducing stress and minimizing the risk of missing payments.
- Lower interest rates. If you qualify for a consolidation loan with a lower interest rate, you can save money on interest over time.
- Potentially improves credit score. Consistently making on-time payments can boost your credit score, and reducing credit utilization may also help.
- Fixed repayment schedule. Unlike revolving credit (like credit cards), a debt consolidation loan has a clear repayment timeline, helping with financial planning.
Potential Drawbacks
- Potential fees. Some consolidation loans come with origination fees, balance transfer fees, or prepayment penalties.
- Longer repayment period. Lower monthly payments may extend the repayment period, meaning you could pay more in interest over time.
- Doesn't eliminate debt. It restructures your debt, but you still owe the same amount and need discipline to avoid racking up new debt.
How to Choose a Debt Consolidation Loan
Understanding how to consolidate debt can help simplify your finances and reduce the total interest you owe. The main benefits of consolidating debt are streamlining your debts into a single account with one monthly payment and reducing the total amount of interest you'll owe.
When shopping for the best loans for debt consolidation, look for an APR that is lower than the average you're paying on the debt you want to consolidate. If you can't qualify for a lower rate, a debt consolidation loan might not be a good choice for you.
Also consider the loan amounts, associated fees and penalties, as well as a lender's credit score minimum and other eligibility requirements when choosing a debt consolidation loan.
Alternatives to Debt Consolidation Loans
If you're looking for one of the best loans for debt consolidation because your credit cards carry high APRs, it's worth your time to consider some alternatives.
Debt Consolidation vs. Negotiating a Lower Interest Rate
One often underutilized strategy is to simply ask your credit card company for a lower rate. There's no guarantee that they'll agree. However, they may well do so, especially if you've been diligent about payments. You can also ask about upgrading your credit card, which may come with a lower APR and other perks.
Debt Consolidation vs. O% APR Credit Card
You may also be able to get a lower rate by transferring your balances to a different credit card. Cards designed for this purpose often come with an introductory 0% APR period that can last anywhere from 12-18 months. Remember that you'll need to pay off your balance before the intro period ends to avoid being hit with high interest rates.
Debt Consolidation vs. Home Equity Lines of Credit (HELOCs)
A debt consolidation loan is an unsecured personal loan, meaning it doesn't require collateral but may have higher interest rates depending on creditworthiness. In contrast, a home equity loan or HELOC uses your home as collateral, typically offering lower interest rates but putting your property at risk if you fail to make payments.
Home equity loans provide a lump sum with fixed interest rates, while HELOCs function as a revolving credit line with variable rates. Borrowers with significant home equity and good financial discipline may benefit from these options.
Other Strategies for Paying Off Debt
Tackling your debt head-on using strategies such as the avalanche and snowball methods is another alternative. The avalanche method prioritizes paying off debts with the highest interest rates first, saving you more money in the long run. Meanwhile, the snowball method focuses on eliminating smaller debts first, creating smaller wins that help maintain motivation.
How to Apply for a Debt Consolidation Loan
Debt Consolidation Loan Application Process and Requirements
After you've gotten prequalified with several lenders, compare their debt consolidation options and choose the one that best suits your needs. To complete the full loan application process you'll need a significant amount of documentation, including things like:
- Pay stubs/proof of income
- The last couple years of tax returns
- Documentation of 401(k)s and other financial accounts
- Photo ID
- Rent/mortgage history
- Proof of collateral, if you're pursuing a secured loan
Get these basics in order before applying for the loan, in order to speed up the process. You can apply for most loans by filling out a form online.
If you are approved, the lender will send you the final loan documents to sign off on. These include all the details such as the interest rate, the amount of time you have to pay it off, the amount you're borrowing, the monthly payments, and any fees. Make sure you fully understand all of it before signing for the loan.
Common Mistakes to Avoid When Applying for a Debt Consolidation Loan
When applying for a debt consolidation loan, avoid common mistakes like not checking your credit score beforehand, which can lead to higher interest rates or denial. Borrowers should also be cautious about taking out more than they need, as this can lead to unnecessary debt. Additionally, failing to compare multiple lenders could result in missing out on lower interest rates and better terms.
What to do if You are Denied a Debt Consolidation Loan
If you're denied a debt consolidation loan, start by reviewing the lender's reason for rejection and work on improving your credit score by paying down balances and making timely payments. Consider applying with a co-signer who has strong credit or looking for lenders that specialize in working with lower credit scores.
FAQs
What is a debt consolidation loan?
A debt consolidation loan combines multiple debts into a single loan with one monthly payment, ideally at a lower interest rate. This can simplify repayment and potentially save money on interest over time.
What should your credit score be for a debt consolidation loan?
Most lenders prefer a credit score of at least 600-650 for a debt consolidation loan, though higher scores (700+) generally qualify for better interest rates. Some lenders like Upstart Personal Loan may approve borrowers with scores below 600, but they often charge higher interest rates or require additional conditions.
Which banks offer debt consolidation loans?
Many banks and credit unions offer debt consolidation loans, including Wells Fargo, Discover, SoFi, and Marcus by Goldman Sachs. These institutions typically offer fixed-rate personal loans that can be used to pay off credit card or other unsecured debt.
What kind of loan do I need to consolidate debt?
Personal loans are the most common type of loan used for debt consolidation. Other options for consolidating debt include a home equity loan, a home equity line of credit (HELOC), and a balance transfer credit card.
Is debt consolidation a good idea?
If you're struggling to pay multiple debts every month, a debt consolidation loan may be right for you. It can help make debt repayment more manageable. However, you could end up paying more in the long run, especially if your credit isn't in great shape.
Fixed rates from 8.74% to 35.49% APR. APR reflects the 0.25% autopay discount and a 0.25% direct deposit discount. SoFi Platform personal loans are made either by SoFi Bank, N.A. or , Cross River Bank, a New Jersey State Chartered Commercial Bank, Member FDIC, Equal Housing Lender. SoFi may receive compensation if you take out a loan originated by Cross River Bank. These rate ranges are current as of 08/08/25 and are subject to change without notice. Not all rates and amounts available in all states. See SoFi Personal Loan eligibility details at https://www.sofi.com/eligibility-criteria/#eligibility-personal. Not all applicants qualify for the lowest rate. Lowest rates reserved for the most creditworthy borrowers. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, income, and other factors. Loan amounts range from $5,000— $100,000. The APR is the cost of credit as a yearly rate and reflects both your interest rate and an origination fee of 9.99% of your loan amount for Cross River Bank originated loans which will be deducted from any loan proceeds you receive and for SoFi Bank originated loans have an origination fee of 0%-7%, will be deducted from any loan proceeds you receive.
The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Autopay is not required to receive a loan from SoFi.
Direct Deposit Discount: To be eligible to receive an additional (0.25%) interest rate reduction on your Personal Loan (your "Loan"), you must set up Direct deposit with a SoFi Checking and Savings account offered by SoFi Bank, N.A., or enroll in SoFi Plus by paying the SoFi Plus Subscription Fee, all within 30 days of the funding of your Loan. Once eligible, you will receive this discount during periods in which you have enabled Direct Deposit to an eligible Direct Deposit Account in accordance with SoFi's reasonable procedures and requirements to be determined at SoFi's sole discretion, or during periods in which SoFi successfully receives payment of the SoFi Plus Subscription Fee. This discount will be lost during periods in which SoFi determines you have turned off Direct Deposit to your Checking and Savings account or in which you have not paid for the SoFi Plus Subscription Fee. You are not required to enroll in Direct Deposit or to pay the SoFi Plus Subscription Fee to receive a Loan.
Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or other eligible status, be residing in the U.S., and meet SoFi's underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates reserved for the most creditworthy borrowers. If approved, your actual rate will be within the range of rates at the time of application and will depend on a variety of factors, including term of loan, evaluation of your creditworthiness, income, and other factors. If SoFi is unable to offer you a loan but matches you for a loan with a participating bank, then your rate may be outside the range of rates listed above. Rates and Terms are subject to change at any time without notice. SoFi Personal Loans can be used for any lawful personal, family, or household purposes and may not be used for post-secondary education expenses. Minimum loan amount is $5,000. The average of SoFi Personal Loans funded in 2024 was around $33K. Information current as of 11/03/25. SoFi Personal Loans originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org). See SoFi.com/legal for state-specific license details. See SoFi.com/eligibility for details and state restrictions.
