Debt Consolidation

Best Debt Consolidation Loans Of 2022 for you

If you’re ready to take charge of your finances, debt consolidation can be a great way to simplify payments and potentially lower your interest rates. It may also reduce your monthly debt payments.

This is because, in contrast to credit cards, medical loans, and other types of debt, personal loans frequently have lower interest rates—especially if you have good to excellent credit.

Many lenders also offer direct payments to third-party creditors, so you won’t have to worry about the details of debt consolidation.

The best personal loans for debt consolidation provide low annual percentage rates (APRs) and flexible repayment terms while avoiding fees such as prepayment penalties, allowing you to retire debt early without paying a penalty.

Best Debt Consolidation Loans

A debt consolidation loan is a type of personal loan that allows you to combine multiple debts into a single payment.

You may also be able to obtain a lower interest rate than on your previous debts, which could help you save money and possibly pay off your debt faster.

To qualify for a debt consolidation loan, you’ll typically need good to excellent credit — but there are a few strategies that could help you get approved even if you have bad credit.

Check your credit history

Lenders will check your credit to see if you are creditworthy. This is why it’s critical to review your credit history to ensure it’s as solid as it can be.

You can get free credit reports from each of the three credit bureaus — Experian, Equifax, and TransUnion — by using a site like

If you discover any errors in your credit report, make sure to dispute them with the appropriate credit bureaus in order to potentially improve your credit score.

The more you can improve your credit history, the more likely you are to qualify for a debt consolidation loan.

Best Overall Debt Consolidation Loan


Marcus is a subsidiary of the investment bank Goldman Sachs that provides personal loans ranging from $3,500 to $40,000.

Marcus assists debt consolidation borrowers by offering direct payment to third-party creditors in addition to flexible loans with terms ranging from three to six years.

Borrowers can also take advantage of the platform’s on-time payment incentive and flexible payment dates.

Similarly, Marcus borrowers are not required to pay any fees, including origination or prepayment penalties.

As a result, Marcus is a more cost-effective way to consolidate your debts without incurring additional fees.

Marcus also allows applicants to prequalify with a soft credit pull, making it simple to compare debt consolidation rates without jeopardizing your credit.

You’ll also have access to robust 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.

Best Debt Consolidation Loans - 2022

Best For Paying Off Credit Card Debt


FreedomPlus is an indirect lending platform that provides personal loans backed by Cross River Bank or MetaBank.

The lender, which was founded in 2014, is one of our top picks for debt consolidation loans due to its flexible loan terms (two to five years) and loan amounts ($7,500 to $40,000).

These features make it easier to consolidate large amounts of debt while spreading payments out over a long period of time and lowering monthly payments.

FreedomPlus, like some of our other top picks, provides direct payment to creditors. Borrowers who direct pay 85 percent of the total loan amount toward debt consolidation are more likely to qualify for a loan.

However, depending on the interest rates on your current debts, the potentially high APR FreedomPlus charges may make saving money by consolidating more difficult.

Similarly, an origination fee of between 1.99 percent and 4.99 percent of the loan amount can raise the loan’s cost.

If you’re thinking about using FreedomPlus to consolidate your debts, you should do the math before signing on the dotted line.

Alternatives to debt consolidation loans

If you do not qualify for a debt consolidation loan, consider the following alternatives:

Speak with your lenders

If you are having financial difficulties, contact your lenders and other creditors as soon as possible.

They may provide hardship assistance, payment plans, or other options to help you avoid missing payments and causing damage to your credit.

For instance, if you have a Marcus loan and have made on-time payments for the past 12 months, you may be able to defer your payment for one month interest-free.

Alternatively, if you are a SoFi borrower who has lost your job due to no fault of your own, you may be eligible for Unemployment Protection.

This program suspends your loan for up to three months at a time (up to 12 months total over the life of your loan).

Home equity loans

If you own a home, you may be able to consolidate your debts through a home equity loan. This type of loan allows you to borrow against the equity in your home while using it as collateral.

If you’re deciding between a home equity loan and a personal loan, keep in mind that home equity loans typically have lower interest rates than personal loans because the lender bears less risk.

This may also make it easier to qualify for a home equity loan even if you have bad credit — but keep in mind that each lender will have their own eligibility requirements.

Sign up for a debt management plan

Nonprofit credit counseling organizations can assist you in tackling your debt by implementing a debt management plan.

These plans typically last three to five years and are available to anyone with debt, regardless of size.

If you enroll in a debt management program, the agency will contact your creditors on your behalf and negotiate a payment plan.

You will make monthly payments to the agency, which will distribute the funds to your creditors.

A debt management plan may also reduce any fees or finance charges you have incurred. It should be noted that, depending on the agency, some plans may charge setup fees or monthly fees.

Debt settlement

Debt settlement, as opposed to debt management plans, is provided by for-profit companies that attempt to settle outstanding debts with your creditors for less than you owe.

Many debt settlement companies will advise you to stop paying your bills while the settlement process is being completed.

This means you risk accruing late fees and potentially harming your credit, making it difficult to borrow in the future.

Also, keep in mind that debt settlement may not actually work, and you may end up hurting your finances more than helping them in the long run. Before going this route, consult with an attorney or a financial advisor.


If all other options have been exhausted, filing for bankruptcy may help you regain control of your debt.

Remember that bankruptcy is extremely damaging to your credit and can stay on your credit report for up to ten years, depending on the type of bankruptcy you choose. As a result, bankruptcy should only be used as a last resort.

A debt consolidation loan could be the first step to financial recovery

With a debt consolidation loan, you can combine multiple debts into a single monthly payment. Furthermore, you may be eligible for a lower interest rate than you have been paying, which means you could save money and possibly pay off your debt faster.

Although a debt consolidation loan may be a good way to manage your debt, it’s also important to examine your financial situation critically to understand how you got there in the first place. This way, you should be able to avoid similar situations in the future.

If you decide to use a personal loan for debt consolidation, keep in mind that you should look into as many lenders as possible in order to find the best loan for your needs. Credible makes this simple: in two minutes, you can compare your prequalified rates from multiple lenders.