The best debt consolidation loans right now

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Alyssa Powell/Business Insider


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Lender Rates Amount available Editor’s note
Wells Fargo Personal Loan 5.99% to 24.49% APR $3,000 to $100,000 for unsecured loans, $3,000 to $250,000 for secured loans Best overall 
LightStream personal loan 5.95% to 19.99%* APR with AutoPay (Rates as of 7/28/2020) $5,000 to $100,000 (for excellent credit) Best for excellent credit
SoFi Personal Loan 5.99% to 16.19% APR (with AutoPay) $5,000 to $100,000 Best for large balances
Payoff loan 5.99% to 24.99% APR

$5,000 to $40,000

Best for fair credit 
Avant personal loans From 9.95% – 35.99% APR

$2,000 to $35,000 for unsecured loans; $5,000 to $25,000 for  secured loans

Best for bad credit

Generally, you’ll need a personal loan for debt consolidation, which means replacing multiple loans with a single loan instead. Most personal loan lenders ask about loan purpose when starting the loan application process, and often, personal loans for debt consolidation have higher interest rates than other personal loans and other loan types. 

Flexibility makes Wells Fargo a top contender for best personal loans for debt consolidation. Wells Fargo separates debt consolidation loans from personal loans, but the interest rates are the same.

Benefits include incredibly competitive interest rates, ranging from 5.99% to 24.49%APR, and an autopay discount of .25% if payments are made from a Wells Fargo account. For unsecured personal loans, the most common type for debt consolidation, the amount available ranges from $3,000 to $100,000 and there are no origination or prepayment fees.

Wells Fargo gives several options for personal loans that aren’t common elsewhere. Firstly, there’s an option to secure your loan with a CD or savings account, though that option is only available to current customers. Secured loans allow you to borrow up to $250,000, though an origination fee of $75 applies to secured loans (unsecured loans don’t have a fee). 

Wells Fargo can send your loan funds to your Wells Fargo bank account, or to a credit account outside of Wells Fargo to pay down your debts directly. 

APR range:5.99% to 24.49%APR

Loan amounts available:$3,000 to $100,000 for unsecured loans, $3,000 to $250,000 for secured loans

Watch out for: Secured loan options. Secured loans use collateral to bring down interest rates and increase the amount available to borrow. But using these savings accounts as collateral could mean losing your savings or CD if you don’t pay on your loan. 

Wells Fargo also has a history of issues with data security and compliance. It has faced federal penalties for improper customer referrals and account openings. 

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 and best auto loans. However, this lender only works with borrowers with good or better credit, with a minimum credit score requirement of 660. 

LightStream offers consistently competitive interest 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. 

APR range:5.95% to 19.99%* APR with AutoPay (Rates as of 7/28/2020).

Loan amounts available: $5,000 to $100,000. According to LightStream’s website, credit card and debt consolidation loans over $50,000 are only allowed for borrowers with excellent credit. 

Watch out for: Varying loan terms between LightStream’s typical personal loans and debt consolidation loans. 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 history 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 a debt consolidation loan, 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. 

A SoFi Personal Loan is the best option for anyone with a high balance, as this lender makes debt consolidation loans of up to $100,000. Debt consolidation loans from this lender are comparable in rates to those offered by LightStream, but SoFi offers higher loan limits to all applicants, where LightStream only allows some borrowers to borrow up to $100,000. Similarly, SoFi doesn’t have any application, origination, or prepayment fees. 

SoFi offers unique features like unemployment protection, which could put loans in forbearance for up to three months if you find yourself out of work. 

APR range:5.99% to 16.19% APR (with AutoPay)

Loan amounts available: $5,000 to $100,000. 

Watch out for: Stringent requirements. SoFi personal loans have a minimum credit score of 680. According to NerdWallet, the average income among borrowers is over $100,000.

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. 

APR range:5.99% to 24.99% APR

Loan amounts available:$5,000 to $40,000

Watch out for:Origination fees. Payoff’s personal loans for debt consolidation offers loans with origination fees between 0% and 5%. Competing lenders Prosper and Best Egg charge minimum 2.41% and .99% origination fees, respectively.

With bad credit, a personal loan for debt consolidation can be expensive, or hard to qualify for. An Avantpersonal loan is the best bet for borrowers with poor credit, requiring a minimum credit score of 580.

Compared to other personal loan lenders offering debt consolidation loans for bad credit borrowers, Avant’s terms are the most generous. Interest rates range From 9.95% – 35.99% APR. While there is an administration fee, it could be lower than competitors’ fees with a cap at 4.75%. Avant also has the advantage of quick, next-day funding available.

APR range: From 9.95% – 35.99% APR

Loan amounts available:$2,000 to $35,000 for unsecured loans; $5,000 to $25,000 for  secured loans

Watch out for: Secured loan options. Like Wells Fargo, Avant offers the option to secure your loan with collateral like your car. While this could be helpful to lower interest rates, it could put your car in jeopardy if you don’t pay. Secured loans have an administration fee of 2.5%, and a maximum amount of $25,000.

Others we considered and why they didn’t make the cut

  • LendingClub:This lender has the potential for high origination fees that could add to the cost of borrowing. The average origination fee is 5.2%. 
  • Prosper: Prosper’s minimum credit score requirement is 640, but borrowers with this score could get lower interest rates and potentially lower fees from Payoff. 
  • Best Egg: Like Prosper, borrowers with credit scores of 640 or above could get lower minimum interest rates and lower maximum fees from Payoff. In order to qualify for the lowest possible interest rates, borrowers need a minimum FICO score of 700 and an income of at least $100,000 per year. Only three and five-year loan terms are available, making these loans less flexible than other options. 
  • Discover:Discover’s personal loan rates start higher than other lenders’ loans, but borrowers who meet the minimum credit score requirements could get lower interest rates from LightStream, which cap lower. However, Discover makes payments directly to creditors, which could simplify your payoff process. Wells Fargo is the only other bank on our listing to offer that option. 
  • Marcus by Goldman Sachs: Like Discover, borrowers who qualify for Marcus personal loans could find lower minimum interest rates with LightStream, SoFi, or Wells Fargo.
  • Axos:This lender’s personal loans require a minimum credit score of 720. For borrowers with this type of credit, lower interest rates can be found elsewhere. 
  • OneMain Financial: OneMain doesn’t have a minimum credit score required to apply, which could make it a viable option for people who don’t meet Avant’s 580 minimum. But interest rates range from a high 18.00% – 35.99%.

Why trust our recommendations? 

Personal Finance Insider’s mission is to help smart people make the best decisions with their money. We understand that “best” is often subjective, so in addition to highlighting the clear benefits of a financial product, we outline the limitations, too. We spent hours comparing and contrasting the features and fine print of various products so you don’t have to.

How did we choose the best debt consolidation loans? 

To find the best personal loans for debt consolidation, 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, a 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 15.09% in the first quarter of 2020, 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. According to loan comparison site Credible, the median amount of debt consolidated in May 2020 was $18,000. 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 loans for excellent, fair, and poor credit, grouping loans into categories based on these credit score requirements.
  • Fees: We considered fees like origination 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. 

What is debt consolidation? 

Debt consolidation takes all sorts of debts, including credit cards, medical debt, or typically any other type of unsecured debt, and rolls it into one loan. 

To consolidate debt, you get a loan from one lender for the total amount of debt you’d like to combine. Then, you use those funds to pay off the individual, smaller debts. At the end, you have all of your debt rolled into one monthly payment, one deadline for debt repayment, and a smaller interest rate. 

Can I use any personal loan for debt consolidation? 

Most personal loans allow a variety of uses, and while most include credit card consolidation or debt consolidation, not all do. Make sure to read the fine print of any personal loan you’re applying for, and make sure that debt consolidation is an acceptable use of your loan. All of the loans we considered had an option to use the loan for debt consolidation, if not a separate loan, which we included details for. 

Disclosure: This post is brought to you by the Personal Finance Insider team. We occasionally highlight financial products and services that can help you make smarter decisions with your money. We do not give investment advice or encourage you to adopt a certain investment strategy. What you decide to do with your money is up to you. If you take action based on one of our recommendations, we get a small share of the revenue from our commerce partners. This does not influence whether we feature a financial product or service. We operate independently from our advertising sales team.

Disclosure: *Your loan terms, including APR, may differ based on loan purpose, amount, term length, and your credit profile. Excellent credit is required to qualify for lowest rates. Rate is quoted with AutoPay discount. AutoPay discount is only available prior to loan funding. Rates without AutoPay may be higher. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice. Payment example: Monthly payments for a $25,000 loan at 6.89% APR with a term of 12 years would result in 144 monthly payments of $255.63.

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