If you’re ready to take care of your money, debt consolidation can help you simplify payments while also potentially lowering your interest rates. It may also help you save money on your monthly debt payments.
Personal loans, unlike credit cards, medical loans, and other types of debt, can have lower interest rates—especially if you have high to exceptional credit.
You won’t have to worry about the mechanics of consolidating your other debts because many lenders allow direct payments to third-party creditors.
The finest personal loans for debt consolidation have low annual percentage rates (APRs) and flexible repayment terms, as well as no prepayment penalties, so you can pay off your debt sooner.
Compare Personal Loan Rates
Rates on personal loans from leading lenders are compared. Credit card debt consolidation, debt consolidation, home improvement, and other loans are available.
Best Debt Consolidation Loans
Marcus is a Goldman Sachs business that provides personal loans ranging from $3,500 to $40,000. Marcus aids debt consolidation customers by providing direct payment to third-party creditors, in addition to giving flexible loans with durations ranging from three to six years.
Borrowers can also take advantage of the platform’s on-time payment incentive and customizable payment schedule.
Marcus borrowers are also exempt from any costs, including origination and prepayment penalties. Marcus is therefore a more cost-effective solution to consolidate your debts without incurring additional fees.
Marcus also allows applicants to prequalify with a soft credit draw, making it simple to compare debt consolidation rates without jeopardizing your credit score.
You’ll have access to strong customer support options as a prospective or current Marcus borrower, with service available seven days a week from 9 a.m. to 7 p.m. Eastern time.
Cross River Bank or MetaBank underwrite personal loans on the FreedomPlus platform, which is an indirect lending platform.
Because of the flexible loan lengths (two to five years) and loan sizes ($7,500 to $40,000), the lender is one of our top selections for debt consolidation loans.
These features make it easy to combine a big amount of debt while spreading payments out over time and lowering monthly payments.
FreedomPlus, like several of our other top selections, allows you to pay your creditors directly. Borrowers who straight pay 85 percent of the total loan amount toward debt consolidation are more likely to qualify for a loan.
However, depending on your present debt interest rates, the possibly large APR FreedomPlus charges may make saving money through consolidation more challenging.
Similarly, an origination fee of 1.99 percent to 4.99 percent of the loan amount can increase the loan’s cost. It’s critical to do the arithmetic before signing on the dotted line if you’re contemplating FreedomPlus for debt consolidation.
Discover provides personal loans in all 50 states, in addition to banking, credit cards, and retirement solutions.
The platform stands out for debt consolidation because it offers loans ranging from $2,500 to $35,000 with durations up to seven years, which is significantly longer than many other personal loans.
This means that, in addition to perhaps qualifying for a reduced interest rate, extending your loan for a longer period of time may allow you to minimize your monthly debt service.
While Discover does charge a late payment fee, there are no origination or prepayment penalties, making it competitive with other top personal loan providers.
Discover will also send payments directly to third-party creditors, which can save time when consolidating debt and gaining financial control.
Finally, Discover distinguishes out because to its online and mobile banking features, as well as its well-regarded customer service team and speedy funding.
It’s also worth mentioning that Discover has a Trustpilot rating of 1.9 stars. The majority of these reviews, however, are from credit card and banking customers—there are claims that Discover is canceling credit accounts as a result of Covid-19.
High interest rates are also mentioned in several negative loan evaluations, making it harder to pay off loan balances.
According to a Discover online customer study, 81 percent of consumers said they saved money by combining debt with a Discover personal loan, and 77 percent of debt consolidation customers said they felt less anxious after taking out a Discover personal loan.
We evaluated 15 popular lenders using 11 different criteria, including loan specifics, loan costs, eligibility and accessibility, customer experience, and the application process. Based on the weighting provided to each criterion, we selected the top ten lenders:
- Cost of the loan: 35%
- Details of the loan: 20%
- 20 percent eligibility and accessibility
- 15 percent direct payment to creditors
- Customer satisfaction: ten percent
We looked at a variety of factors within each category, including possible loan amounts, payback terms, APR ranges, and fees.
We also looked at the lender’s minimum credit score requirements, whether co-signers or joint applications are accepted, and the lender’s geographic availability. Finally, we looked at how accessible each provider’s customer service team was.
We assigned partial points where appropriate based on how well a lender met each requirement.
Tips for Comparing Personal Loans for Debt Consolidation
Traditional banks, credit unions, and alternative lending platforms frequently provide personal loans online, allowing you to apply quickly and conveniently without having to visit a bank branch.
Many of these lenders also have reasonable interest rates and flexible repayment options, so combining your previous loans could save you money.
When comparing personal loans, keep the following in mind:
Prequalify wherever feasible. Many personal loan companies allow potential borrowers to prequalify for a loan.
This implies that the applicant can enter information about their financing needs, income, housing situation, and other pertinent factors to see what loan amounts, rates, and repayment terms they are likely to qualify for.
Even better, this procedure usually just necessitates a mild credit inquiry, allowing you to comparison shop without jeopardizing your credit score.
If you think you can benefit from debt consolidation but aren’t sure what rates you’ll be eligible for, the prequalification process can help you narrow down your options by eliminating lenders with higher rates.
Think about why you’re taking out a loan. Personal loans can be used for a variety of reasons, but they’re most commonly utilized for debt consolidation, home upgrades, vacations, weddings, funerals, significant purchases, and other personal needs.
As a result, lenders frequently prohibit you from utilizing personal loans for postsecondary education, business goals, or unlawful activities, at the very least.
Always clarify that debt consolidation is an acceptable use of the loan funds when picking a lender. Even better, find out if the lender will pay your other creditors on your behalf.
Keep an eye out for hidden costs. Some lenders offer fee-free personal loans, which don’t charge origination fees, late fees, prepayment penalties, or other standard loan costs.
However, because this is the exception rather than the rule, it’s critical to inquire about costs when looking for the finest loan conditions.
This is especially crucial if you’re consolidating debt to save money because fees can eat into your savings over the course of the loan.
If a lender charges an origination fee, find out whether it’s included in the APR or deducted from the loan amount prior to funding, as this could affect the loan amount you need.
Examine the customer service choices provided by the lender. If you’ve located a lender willing to lend you the money you need on reasonable conditions, there’s one more thing to think about before you sign the loan agreement.
While customer service may not seem important during the honeymoon period of your loan, it might be critical if you have payment troubles or endure financial hardship throughout the repayment period.
To make sure it’s a good fit, look over the lender’s customer service resources and read reviews from previous and present borrowers.
How Do Debt Consolidation Loans Work?
Debt consolidation occurs when a borrower takes out a new loan with better terms (lower interest rate, lower monthly payment, or both), and then utilizes the money to pay off their existing obligations.
Credit card balances, vehicle loans, and other personal loans are frequently paid off via debt consolidation loans.
How Debt Consolidation Loans Work?
Apply for a personal loan from your bank or another lender to begin debt consolidation. When your debt consolidation loan is approved, your lender may offer to pay off your other bills automatically—or you can accept the money and pay them off yourself.
You’ll make a single monthly payment on your new debt consolidation loan after your pre-existing debts are settled using the funds from your new debt consolidation loan.
While debt consolidation can help you save money on your monthly payments, it does so by extending the term of your merged loans.
Debt consolidation also simplifies payments and makes managing money easier, such as having a single monthly payment due date.
Compare Debt Consolidation Loan Rates
Interest rates on personal loans are determined by a number of criteria, including the borrower’s creditworthiness, the lender, the loan amount, and the payback duration.
Personal loan interest rates, on the other hand, typically range from roughly 5% to 36%, with the lowest rates reserved for customers with great credit.
|COMPANY||MINIMUM CREDIT SCORE||APR RANGE||LOAN AMOUNTS||VIEW MORE|
|Marcus||Marcus does not disclose this information||6.74% to 19.74% with autopay||$3,500 to $40,000||View More|
|FreedomPlus||620||7.99% to 29.99%||$7,500 to $40,000||View More|
|Discover||660||5.99% to 24.99%||$2,500 to $35,000||View More|
|Upgrade||580||5.94% to 35.97%||$1,000 to $50,000||View More|