Compare Top Debt Consolidation Loan Rates

We compared and reviewed loans from more than 10 debt consolidation loan lenders to find the best rates and loan features.

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Score
Loan Features
Loan Amount
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LightStream
9.9
Trustpilot
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Loan Features

Min. Credit Score: 660

APR:4.49% - 20.49%

Term:24-84 months

Loan Amount:
$5,000-$100,000
Low Rates
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9.6
Loan Features

Min. Credit Score: 580

APR:5.94% - 35.97%

Term:36-60 months

Loan Amount:
$1,000-$50,000
Loan Features

Min. Credit Score: 580

APR:9.95% - 35.99%

Term:24-60 months

Loan Amount:
$2,000-$35,000
Loan Features

Min. Credit Score:

APR:3.50% - 35.99%

Term:36-60 months

Loan Amount:
$1,000-$50,000
Loan Features

Min. Credit Score: 600

APR:7.04% - 35.89%

Term:36-60 months

Loan Amount:
$1,000-$40,000

FAQs About Consolidation Loans

What is Debt Consolidation Loans?

Even if you are easily making your monthly payments for your debt obligations, it can take months or even years to finally pay it all off. Sometimes keeping track of all your monthly payments can be exhausting if you have debt from multiple different avenues. Consolidating your debt into a single payment can allow you to get a lower interest rate and allow you to only have to focus on paying one bill each month.

How Does Debt Consolidation Work?

Debt consolidation is the act of combining all of your debt obligations into a single payment. Nowadays people can have debt with multiple different lenders for many different reasons. If you have debt from multiple lenders this probably means that you have different interest rates for each loan. One of the main benefits of consolidating your debt into one loan is to improve your overall interest rate. Paying a lower interest rate can save you hundreds to thousands of dollars in the long run depending on how much debt you are in. Debt consolidation can be used to combine many different types of debt such as:

How to Consolidate Your Debt?

If you are considering consolidating your debt, there are a couple of ways to go about it. Both of the methods listed below will concentrate your debt into one single payment ideally with a lower interest rate.

  • The first method to consolidate your debt is to get a balance-transfer credit card with a good intro promotional period. For example, many credit cards will give you 0% interest for the first year of purchases or balance transfers. You can take advantage of this to literally get your interest rate to 0% for a certain amount of time depending on the card you choose. The only downside of this is that you will need a solid credit score. Otherwise, this can be a great way to save a ton of money on your interest payments and reduce the number of bills you have into just one.
  • Another option you have to consolidate your debt is to get a debt consolidation loan. Essentially you would take out a personal loan and use this money to pay off all of your outstanding debt. At this point, you would be left with just a single personal loan to pay back with a fixed interest rate.

Pros and Cons of Debt Consolidation

As with everything in life, debt consolidation has both its pros and cons. Before considering debt consolidation, consider the following factors:

Pros
Boost your credit score. Consolidating your debt can potentially improve your credit utilization ratio and can help you make more on-time payments.
Fewer loans to keep track of. If you have multiple loans taken out it can become difficult to keep up with all of them. Consolidating your debt into one payment can help you keep track of all your debt within one payment.
Better interest rates. Generally, credit cards can have high interest rates. If you can consolidate all of your debts into one loan with a good interest rate you can save a lot of money in the long run.
Cons
Potential to incur fees. Depending on how you decide to consolidate your debt, you may have to pay some fees. These fees can be balance transfer fees, origination fees, or closing costs. Make sure to read the fine print and make sure consolidating your debt is truly worth it after considering fees.
Could end up with a worse loan structure. Depending on what type of loans you have, simply consolidating them into one may come with a worse deal than you had before. If the interest rate is only slightly better or the same but you agree to a longer timeframe you could just end up paying more.
Put assets at risk. If you decide to take out a secured loan using your house with a home equity loan or a HELOC, then you are risking your assets being seized. If you do not make your payments then this could cause you to lose your house.

When to Consider Debt Consolidation?

Debt consolidation personal loans can be a great solution for those who are not already in deep debt. If your monthly debt payments are less than 50% of your income then debt consolidation can be a good move. It also helps to have a good credit score that can allow you to get approved for a good interest rate on a credit card or debt consolidation loan.

Credit cards are one of the most common forms of unpaid debt. Generally, credit cards can have interest rates around 18% to 25%. If you are already making your payments on time and have enough to pay it off then you should consider getting a debt consolidation loan which has much lower interest rates than a credit card. This can help some people psychologically because with a personal loan you have a payment to make each month as opposed to a small minimum required payment for a credit card. Only making a minimum payment on your credit card can easily lead to paying more interest over time.

When Not to Consider Debt Consolidation?

Although debt consolidation can be a great way to reduce interest payments and simplify your loans, it may not be the right choice for everybody. To be honest, many people who are stuck in debt may have excessive spending habits that should be addressed before anything else. Those that are drowning in debt and will still not be able to pay it off even with consolidation should consider alternative solutions. As a rule of thumb, if your debt payments are more than half of your income then you may want to consider seeking debt relief. In certain situations, you would be better off filing for bankruptcy than attempting to barely make their minimum payments each month.

Bottom line

Debt consolidation can help you save money in the long run by reducing your interest rates and condensing your loans into a single monthly payment. Those that are responsible with their spending and keep track of all their payments can really benefit from consolidating their debt. However, people with excessive spending habits who have no desire to pay their debt off on time may not find much use in consolidating their debt. This process is not a simple fix for everybody’s debt problems. It is only recommended to consolidate your debt if you stay on top of it and go through the work to calculate the pros and cons of your choice.

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