Many companies featured on Money advertise with us. Opinions are our own, but compensation and
in-depth research may determine where and how companies appear. Learn more about how we make money.

By: and
Updated by:
Published: Sep 07, 2023 30 min read

Ads by Money. We may be compensated if you click this ad.AdAds by Money disclaimer
Our Partner
  • Serving customers with $15,000 of debt and more
  • 100% free, no risk consultation
  • Significantly reduce your debt
  • No upfront enrollment fees
  • Get out of debt in 12-48 months!
  • Applying won’t affect your credit score
  • A+ Better Business Bureau rating
Our Partner
  • Free, personalized evaluation from certified debt consultants
  • Over 850,000 clients have enrolled in the Freedom Debt Relief program since 2002
  • American Fair Credit Council accredited
  • Settled over $15 billion in client debt since 2002
  • Recommended for people with $15,000 in unsecured debts and up
  • No upfront fees
Our Partner


  • Fast and easy application process
  • No upfront fees
  • One-on-one evaluation with a debt coach
  • Become debt-free in 24 to 48 months
  • For people with $7,500 in unsecured debts and up
  • Rated A+ by Better Business Bureau
Our Partner
  • Consolidation Loans Up to $100,000
  • Ideal for consumers with over $10,000 in unsecured debt
  • Flexible repayment terms with your budget in mind
  • Free quotes are offered
  • “A” Rated by the BBB
  • Reviewing offers won't impact credit
  • Easy pre-approval process with instant decision

*Rates and APYs are subject to change. All information provided here is accurate as of August 30, 2023

Debt consolidation can be an effective way to pay off large balances faster, especially if you have multiple high-interest debt payments to make every month.

Compare our picks for the best debt consolidation loans and read our guide to find out how consolidating can help reduce your debt, simplify your personal finances and save you money in the long run.

Our Top Picks for Best Debt Consolidation Loans of September 2023

Ads by Money. We may be compensated if you click this ad.AdAds by Money disclaimer
If you owe over $15,000 in debt, a Debt Relief Program may be able to help get you back on your feet more quickly.
Select your state to begin applying for Accredited Debt Relief's relief program.
HawaiiAlaskaFloridaSouth CarolinaGeorgiaAlabamaNorth CarolinaTennesseeRIRhode IslandCTConnecticutMAMassachusettsMaineNHNew HampshireVTVermontNew YorkNJNew JerseyDEDelawareMDMarylandWest VirginiaOhioMichiganArizonaNevadaUtahColoradoNew MexicoSouth DakotaIowaIndianaIllinoisMinnesotaWisconsinMissouriLouisianaVirginiaDCWashington DCIdahoCaliforniaNorth DakotaWashingtonOregonMontanaWyomingNebraskaKansasOklahomaPennsylvaniaKentuckyMississippiArkansasTexas
Visit Site

Best Debt Consolidation Loans Reviews

  • No fees for loan origination, late payments or prepayment
  • Borrowers with excellent credit can get a lower interest rate
  • 0.50% rate discount for setting up Autopay
  • Doesn't provide loan pre-approvals
  • Doesn't accept loan applications via phone or fax
  • Autopay discount only available before loan disbursement
8.99% - 25.49%
Loan amount
Term options
24 to 144 months, depending on the loan type
Minimum Credit Score

Why we chose it: LightStream is our top choice for large loans, considering its $100,000 limit and flexible repayment terms of two to 12 years.

LightStream offers personal loans up to $100,000 with terms ranging from 24 to 144 months, the widest range among the companies we evaluated. You can check payment term options by entering your desired loan amount in their debt consolidation loan calculator. However, note that this calculator provides a general calculation using the lowest possible APR.

With its Rate Beat Program, LightStream offers an interest rate that is 0.10% lower than any competitor’s rate, but only if you have already been approved for the competitor’s lower rate. This means you would need to apply for both loans and successfully obtain a lower APR elsewhere.

If the customer is not satisfied with their loan experience within the first 30 days, they can contact customer service and request a questionnaire. After evaluating the issue, LightStream can compensate the borrower with $100.

LightStream is a good option for those with excellent credit who need a large loan, as it requires good to excellent credit, an established credit history, various open accounts and a stable income.

  • Unemployment protection
  • Pays lenders directly
  • Accepts joint applications
  • Loan disbursement in one or two business days unless paid directly to creditors
  • Term range isn't as varied as competitors
  • Not open to Mississippi residents
  • Co-applicant must live in the same residence as the primary borrower
Loan amount
Term options
Two to seven years
Minimum Credit Score

Why we chose it: SoFi’s credit card consolidation loans don’t charge any origination, prepayment or late payment fees; additionally, they offer multiple ways to get discounts on their rates.

SoFi funds most personal loans on the same day of approval — unless the loan is for more than $20,000 or the borrower enrolls in Direct Pay, a service where SoFi pays lenders directly and the borrower doesn’t actually receive the loan proceeds. (Note that those who enroll in Direct Pay obtain an additional 0.25% APR discount on their loan rate.)

SoFi offers temporary payment modification and job placement assistance if a borrower loses their job. This benefit is offered in three-month increments for up to 12 months. Interest will continue to accrue during that period. To qualify, borrowers have to also qualify for governmental unemployment compensation and actively participate in SoFi’s Career Advisory Group as part of their job search.

Although its main competition offers longer payment terms or lower interest charges, SoFi’s various additional banking services, accessible customer service and comprehensive mobile app make it an excellent choice for anybody looking for a no-fee loan.

  • Apply and check application status online
  • Accepts co-borrowers
  • No origination fee or prepayment penalty
  • You need to be a credit union member for disbursement
  • No Autopay discount
7.74% - 17.99%
Loan amount
Term options
12 to 60 months
Minimum Credit Score
Not disclosed

Why we chose it: With its $600 minimum loan amount, high customer satisfaction and low interest rates, PenFed is our top pick for best debt consolidation loan for debt under $1,000.

PenFed is a members-owned federal credit union. Becoming a member is a good idea because federal credit unions typically offer more favorable loan terms, such as lower interest rates and fewer fees. Borrowers looking for a small loan will be glad to know that there’s a $600 minimum you can apply for.

You don’t have to be a PenFed member to check your rates and get pre-approved. However, you’ll need to become a credit union member to apply for a loan. To become a member, you must open a savings account, for which you’ll need to deposit a minimum of $5. After approval, the loan is disbursed within 1-2 business days.

PenFed doesn’t charge origination or early payment fees, but there’s a $29 late payment fee to those submitting their payment more than five days late. In addition, PenFed features a mobile application for iOS and Android where members can check their loan status, make loan payments and transfer money between accounts.

  • Partners with TransUnion to provide your credit score
  • Online application process and loan calculator
  • Loan products for borrowers with poor credit
  • Some lenders offer personal loans up to $250,000
  • Credit requirements depend on the company selected
  • Some of its lenders will charge an origination fee of up to 6% of the loan amount
Depends on the lender you're matched with
Loan amount
Depends on the lender you're matched with
Term options
Depends on the lender you're matched with
Minimum Credit Score
Depends on the lender you're matched with

Why we chose it: Fiona ranked as best for comparing personal loan lenders as its marketplace enables borrowers to browse and compare multiple lenders based on criteria like credit score and location.

Fiona offers personal loans for debt consolidation from an array of lending partners and for all types of credit, from poor to excellent. It partners with renowned companies such as LendingClub, SoFi, Avant and Marcus by Goldman Sachs.

In contrast to other lenders, some of Fiona’s lending partners offer secured personal loans for debt consolidation. Secured loans require a property or assets — car title, stock investments, equity from life insurance policies, real estate, and precious metals — to back up the loan. Be aware, however, that if you fail to make payments on a secured loan, the lender will repossess the assets you used as collateral.

Among other loan offers, there’s refinancing for secured personal loans as well as unsecured personal loans, including auto, student loan and mortgage refinance.

Since Fiona is not a lender itself, but a marketplace, fees will depend entirely on the lender you’re matched with, so be sure to read the fine print during your application process.

  • Pays lenders directly
  • Same-day approval
  • You can return loan funds within 30 days
  • You can apply online or by phone
  • Minimum household annual income of $25,000
  • Late payment fee of $39
  • Funds cannot be used to pay secured loans or Discover credit cards
7.99%- 24.99%
Term options:
Term options
36 to 84 months
Minimum Credit Score

Why we chose it: Discover’s low interest rates make it our top choice for best debt consolidation loan for credit card debt.

Discover doesn’t charge any origination or prepayment fees, and its personal loans have some of the lowest minimum APRs available. Upon approval, Discover will disburse loan funds directly to your creditors within one business day. Also, if a client is not satisfied with their experience or can pay back quickly and without interest, they can return the funds within 30 days.

Discover requires a minimum of $25,000 in annual income and, like most other lenders, evaluates debt-to-income ratio, credit history, application information and the selected payment term.

Clients can access 24/7 customer service over the phone and through the Discover mobile app for iOS and Android. They can also check their FICO score, access their bank account, make payments, and check balances through the app.

  • Assists borrowers with debt management
  • Doesn't charge a fee until all debts are settled
  • Could match customers with lenders through an affiliate program if needed
  • Minimum of $10,000 debt
  • Charges a fee of 15-25% of the debt amount
  • Origination fees for personal loans range from 1% to 6% of the financed amount
4.9%-35.99%, depending on loan affiliates
Loan amount
$1,000-$100,000, depending on loan affiliates
Term options
4 to 84 months, depending on loan affiliates
Minimum Credit Score
Depends on loan affiliates

Why we chose it: Accredited Debt Relief is a debt consolidation service that helps people consolidate and renegotiate their debt.

Customers must have at least $10,000 in unsecured debt and pay a fee of 15-25% of the debt after their debts are settled. While that fee might seem high, there are two factors that come into play.

First, Accredited doesn’t charge until accounts have been settled and there’s a clear path forward to get rid of the remaining debt. And second, outstanding debt could be reduced by up to 50%, which would leave customers still paying much less than they originally owed.

In case a loan is needed or considered the best course of action, the company has an affiliate program to match customers with lenders. Note that all loans have origination fees ranging between 1% and 6%.

Accredited has been in business for over 13 years and is accredited by the American Fair Credit Council and the Consumer Debt Relief Initiative. The company also has an A+ rating with the Better Business Bureau.

Ads by Money. We may be compensated if you click this ad.AdAds by Money disclaimer
Overwhelmed by debt? Accredited Debt Relief can help consolidate your debt.
Avoid a lifetime of struggling with debt with the help of Accredited Debt Relief. Click below to get some relief today!
Visit Site

Other lenders we considered

For our top list, we analyzed several debt consolidation loan lenders and selected the ones with competitive interest rates, excellent customer service and a variety of loan terms. The following companies didn’t stand out in those categories, but they might be a good fit for your needs.

National Debt Relief

  • Offers debt management services
  • Free consultation
  • Negotiates with creditors to settle client's outstanding debt
  • Online quote
  • Not a loan originator
  • Only works with clients that have at least $10,000 in debt
  • Charges a fee of 15-25% of the debt amount

National Debt Relief services include options for consolidation loans, credit counseling services, and bankruptcy referrals. To prequalify, borrowers need to have at least $10,000 in unsecured debt. National Debt Relief also charges a fee of at least 15% of their client’s debt amount.

Why it didn’t make our top picks: National Debt Relief didn’t make it to our main list because it’s not a loan originator; it is a debt consolidation company or debt management service.

Happy Money

  • Payoff loan with customizable terms, rates and monthly payment
  • APRs start at 11.75%
  • Pays creditors directly
  • Loans start at $5,000
  • Origination fee of 0%-5% of the loan amount
  • Customers report prolonged approval time

Happy Money doesn’t charge any application, prepayment or late fees. However, it does charge an origination fee of up to 5% of the loan amount. The company claims loan approval can take from 5 to 7 business days, and direct payment to creditors as much as two weeks.

Why it didn’t make our top picks: Many customer reviews report approval delays of up to 30 days. They also report that direct payment to creditors may take up to 30 business days as well.

Best Egg

  • Approval in minutes
  • APR from 8.99%-35.99%
  • Funds within 24 hours after approval
  • Personal loan calculator
  • Origination fee of 0.99-8.99% of the loan amount
  • Origination fee on a loan term 4-years or longer will be at least 4.99%
  • High income requirements to qualify for the lowest rates

Best Egg is a lending platform that provides personal loans ranging from $2,000 to $50,000. The platform provides a simple and convenient online application process, facilitating access to financial assistance. Personal loan options include consolidating multiple loans into a single loan or refinancing credit card debt.

Why it didn’t make our top picks: Best Egg charges a high origination fee. It also has highly selective criteria for the best rates; borrowers must have a minimum FICO score of 700 and an annual income of at least $100,000 to qualify.

OneMain Financial

  • Debt consolidation calculator
  • Brick-and-mortar locations
  • Loan specialist counseling
  • APR from 18%-35.99%
  • Late payment fees from $5 to $30 or 1.5%-15% of your loan amount
  • Origination fees from $25 to $500 or 1%-10% of your loan amount

OneMain Financial offers online and in-person banking, with branches in 44 states. It features secured and unsecured debt consolidation loans from $1,500-$20,000 and terms from 24-60 months. To obtain the lowest rate on large loans, OneMain requires collateral.

Why it didn’t make our top picks: OneMain Financial didn’t make our top picks because of its interest rates and fees, which are significantly higher than competitors.


  • Funded one day after approval
  • No prepayment penalty
  • Avant mobile app for iOS and Android
  • Administration fee of up to 4.75%
  • Late and returned payment fees
  • No Autopay discount available

Avant features loan pre-approval, Autopay and a mobile app available where customers can manage their loans. Customer service is available online, via email or by phone.

Why it didn’t make our top picks: This lender didn’t make our list because of its high interest rates and number of fees, and its lack of discounts to offset these costs.


  • Loans from $1,000-$50,000
  • No prepayment penalty
  • Only offers three and five years terms
  • High origination fee

Upstart debt consolidation loans range from $1,000-$50,000. Potential borrowers can obtain a pre-approval with a soft credit pull that won’t impact their credit score. Most loans are funded the next business day after approval.

Why it didn’t make our top picks: While Upstart ranks highly in customer satisfaction, its high origination fee of up to 8% and payment terms of only 3 or 5 years kept it off our list.


  • Online application
  • Same-day approval
  • Loan funding in one to three business days after approval
  • Limited terms
  • Origination fee of 1.99%-5.99%

Achieve offers personal loans for debt consolidation featuring same-day approval and funding between one to three business days after accepting the loan offer.

Why it didn’t make our top picks: Achieve isn’t part of our main list because of its high origination fee and limited terms of 2 to 5 years.

Debt Consolidation Loans Guide

Debt consolidation loans can help you manage your debt more easily and, in some cases, even pay it off faster. Read on for more information about how debt consolidation loans work, how to apply for them, and other alternatives for debt management.

What is a debt consolidation loan?

A debt consolidation loan is a type of personal loan meant to pay off high-interest debt, thereby making it easier and quicker to pay. The best debt consolidation loans offer lower Annual Percentage Rates (APR) than many other loans or credit cards, which can translate to significant savings for borrowers.

A debt consolidation loan is one of the three most popular debt consolidation options. You could also transfer your credit card balance or borrow a home equity loan to consolidate debt.

Personal loan

Personal loans are typically unsecured. This means that the lender can’t take any of your assets if you default on the loan. These loans are commonly used to pay for existing debt, finance a big purchase, pay medical bills, or cover home improvements or renovations.

For an in-depth look at these types of loans, check out Money’s picks for the best personal loans.

Balance transfer

Moving debt from one credit card to another is known as a balance transfer. This can be a good option if you have high-interest debt on one card and can get a lower interest rate on another card.

Home equity loans

These loans use your home as collateral; if you default on the loan, the lender can take your home. The amount of equity you have in your home will determine how much money you can borrow.

How do debt consolidation loans work?

A debt consolidation loan is used to pay off multiple smaller loans. Once you’re approved, lenders will disburse funds within a couple of business days. You can use the funds to pay off your creditors or, in certain cases, have the lender pay creditors directly.

Debt consolidation loans streamline debt management, including on-time payments, as you only have one due date to keep track of and one payment to make. Additionally, the new debt consolidation loan often has much lower APRs than your existing debt, saving you thousands of dollars in interest.

However, debt consolidation loans can have certain costs as well, such as an origination fee, late fee and even an early payment fee — an additional cost if you were to pay the loan in full before your agreed term is done.

Before selecting a loan, borrowers should compare interest rates, loan terms and fees. A debt consolidation loan is worth it if it allows the borrower to save in the long run. If the interest rate and fees in a debt consolidation loan exceed what you’re currently paying for other loans and credit card debt, a debt consolidation loan might not be the best option.

For more information, check out the pros and cons of debt consolidation.

How does a debt consolidation loan affect your credit?

A debt consolidation loan will inevitably alter your credit score in some way or another, but it’ll depend on a few factors if that change is for the better or the worse.

Some things that could impact your score include:

  • Hard inquiry: In order to approve your loan, lenders will conduct a hard inquiry on your credit, that is, they will request a full review of your credit history which places a mark in your report. A hard inquiry on your credit can temporarily lower your score.
  • Credit age: Opening a new account — whether it’s a loan, credit card or mortgage — will lower your average credit age, which affects your score. How much it decreases depends on your account's age. The longer your history, the less impact it has on your score.
  • Number of accounts: The number of accounts you have also affects your credit. In certain cases, the more accounts, the merrier, but too many accounts can hurt you too, especially if they’re revolving credit. Additionally, a new loan can impact your eligibility for new accounts if it substantially increases the amount you owe overall.

However, debt consolidation can also help your credit score. For instance, it can help you keep better track of your accounts and pay on time. It’ll also decrease your credit utilization ratio. This ratio indicates how much of your revolving credit (credit cards or lines of credit) you’re using, and the lower the ratio, the better for your credit score.

If the debt you’re eliminating is mostly credit card debt or lines of credit, a consolidation loan will lower that utilization ratio when you pay off your account and will most likely improve your score. This doesn’t mean that creditors will automatically approve you for more credit, but it’s a big step in the right direction.

How long does debt consolidation stay on your credit report?

Debt consolidation accounts that are closed and in good standing positively affect your credit and can remain on your report for up to ten years. However, late payments can remain as negative marks on your credit for up to seven years.

How to choose the best debt consolidation loan

Selecting the right debt consolidation loan will depend on your financial goals and how much of a monthly payment you can afford.

When choosing a debt consolidation loan, consider the following:

Interest rates

  • APRs typically range from 6.99% to 24.99%.
  • Your interest rate will depend on your credit score (FICO or VantageScore), current income, and debt-to-income ratio, among other factors.
  • Aim to find APRs lower than your current interest rates; for example, if you have a 15% average APR on your credit card debt, only consider lenders that offer lower APRs to consolidate your debt.


  • Lender fees may include origination, late payment, and prepayment penalties.
  • Origination fees usually range from 0% to 7% of the loan amount.
  • Late payment fees can range from $25-$45.
  • Prepayment penalties can be a fixed fee, a percentage of the loan balance, or the interest amount the lender loses by the early payment.
  • Compare lender fees. Not all lenders charge all fees—and some lenders don’t charge any fees!

Loan terms and repayment options

  • Most repayment options range from one to seven years.
  • Many lenders offer the option of paying creditors on your behalf.
  • Different repayment options include using a mobile app, website, over the phone and setting up direct deposit.
  • Look into repayment options and additional perks like credit score and identity theft monitoring.

How to get a debt consolidation loan

1. Do a credit check by requesting your reports from one or all three credit bureaus. This can help you get a better idea of the interest rate you’ll get before risking a hard pull on your credit.

2. Calculate your debt and determine the interest rate you’re currently paying on your credit cards and other outstanding debt. This will help you calculate the interest rate you’d need from a debt consolidation lender in order for the loan to be worthwhile.

3. Research lenders, their interest rates, loan terms and fees.

4. Use a loan or a debt-to-income ratio calculator to get an idea of the rate you can obtain with your credit score.

5. Decide on a lender offering a lower interest rate and lower fixed monthly payments than what you currently have.

6. If the pre-approved offers involve a higher interest rate than what you’re currently paying, consider whether you have a friend or family member with a higher credit score that is willing to act as co-signer.

7. Apply for a loan.

8. Make sure to read the fine print of the offer before accepting it.

9. Obtain the loan funds and pay your debt or, if the lender has a direct payment option, have the lender pay your creditors on your behalf.

How to get a debt consolidation loan with bad credit

Some lenders work with customers with poor credit; however, most lenders will require at least a 620 FICO score. Additionally, lenders will invariably charge borrowers with a poor or no credit history its highest APRs. If you have bad credit, here are three tips to help you get a debt consolidation loan:

Get a secured debt consolidation loan. You can use collateral, such as your car or your home, to guarantee the payment of a secured debt consolidation loan. This type of loan may be easier to get approved for if you have bad credit.

Add a co-signer. If you have a friend or family member with good credit, they may be willing to cosign on your debt consolidation loan. Adding a co-signer may also get you a lower interest rate.

Work with a credit counseling agency. An agency can help you negotiate lower interest rates with your creditors. They can also create a debt management plan (DMP) for you.

Whether you finally get loan approval or your loan application continues to be denied because of poor or no credit, the next step should be to improve your credit score and credit history. To fix your credit, you can find a credit repair service or research and improve your credit report.

Alternatives to debt consolidation loans

Debt consolidation loans are not the only answer if you’re wondering how to get out of debt. Lenders and credit card companies offer other options as well as debt consolidation.

Negotiate with debt collectors

If some of your debt is delinquent and has been sold to debt collectors, you might have a chance to reduce what you owe. Debt is usually bought for much lower than its original amount. This means you have a chance to negotiate with collection agencies and come to a middle ground between what you originally owed and what they paid for your debt.

If you’re being contacted by debt collectors, it’s important to know your rights, as established by the Fair Debts Collection Practices Act (FDCPA). Ask for all the information regarding your debt before proceeding with any payment. Once it’s confirmed, negotiate the payment amount and terms with the collection agency until you reach an agreement you’re satisfied with.

Note that, while you can negotiate to pay less than what you owe, this compromise will be reflected in your credit history and negatively impact your score.

Here, you can find a more detailed guide on how to negotiate with debt collectors.

Debt consolidation companies

Debt consolidation companies do not provide you with the funds to pay off your debt like a debt consolidation loan; instead, they serve as a middleman between you and your creditors. You have a single monthly payment directly with them and they pay your bills at a lower interest rate.

The main advantage of debt consolidation programs is that, since it’s not a loan, they don’t have credit score requirements. Additionally, these services give counseling, help you analyze your debt and develop a plan to avoid more debt-related problems in the future.

The main advantage of debt consolidation programs is that, since it’s not a loan, they don’t take into account your credit score. Additionally, these services give counseling, help you analyze your debt and develop a plan to avoid more debt-related problems in the future.

Keep in mind that debt consolidation programs do not cover secured loans such as home and auto loans, among others.

Home equity loans and home equity lines of credit

Home equity loans and home equity lines of credit let the customer borrow money against their home equity. Home equity is the difference between the value or amount your home could be sold for and what you owe the mortgage lender.

With a loan, a lump sum is disbursed in one payment. Lines of credit (HELOCs), on the other hand, are revolving credit. You can withdraw money from this line of credit as needed during its draw period; when this period ends, you pay back whatever you used in monthly installments.

If this sounds like the right choice for you, check out Money’s best home equity loans for more information.

Balance transfer credit cards

Instead of consolidating credit card debt, you can transfer all balances to a new credit card with lower or zero interest. Many credit cards offer an introductory period from 12 to even 21 months with 0% APR, allowing customers to pay off or significantly lower their balance while not adding any additional debt.

Take a look at Money’s best balance transfer credit cards and how to consolidate credit card debt for more information.


Bankruptcy is a legal action taken by people or businesses that have reached a point where they’re unable to pay back their debt. It should be the last resort for dealing with creditors and debt issues as it negatively impacts your credit score and your ability to obtain credit in the future. There are two main types of bankruptcies:

  • Chapter 7: When a trustee takes control of your property to sell it or turn it into a profit to pay your creditors. Depending on the state you live in you might be able to keep some of your properties.
  • Chapter 13: A court approves a repayment plan where you agree to pay part of your wages to your creditors. A trustee will be appointed by the court to collect the money from you and make sure that the payment plan is completed.

Not all debt can be discharged by the court when you file for bankruptcy. Some of the debt that cannot be discharged are:

  • Child support
  • Student loans
  • Court fines
  • Most taxes

A bankruptcy will appear on your credit report for around ten years, making it more challenging to apply and be approved for credit in the future.

If your situation calls for this measure, read our guide on how to file for bankruptcy for more detailed information.

Debt consolidation vs. bankruptcy, which is better?

Debt consolidation and bankruptcy are very different approaches for those struggling with debt. The best option for you will depend on your circumstances. Many consider bankruptcy as a last resort because it makes getting new credit practically impossible for ten years or more after filing for it.

On the other hand, debt consolidation can become more expensive if you don’t make all your payments on time. Furthermore, if you have a secured debt consolidation loan and must default, you may lose significant assets, such as your home.

Talk to a financial advisor if you ever have to choose between these two options.

Latest News on Debt Consolidation

  • The Fiscal Responsibility Act of 2023 passed in June suspended the nation’s debt ceiling and allowed the U.S. to continue paying all of its bills. Yet, this deal impacts much more than just the debt ceiling — it also includes several provisions that could affect your money.
  • Inflation has led to a surge in credit card use. As the high cost of living has forced many people to rely on credit cards to afford basic necessities, credit card debt is piling up for those struggling to make ends meet.

Debt Consolidation Loans FAQ

What is debt consolidation?

Debt consolidation is a financial strategy involving a new loan to pay off multiple debts. Find out more by reading the section Debt Consolidation Loans Guide and evaluate whether it makes sense for you.

Is debt consolidation a good idea?


Overall, debt consolidation can be a good option for those struggling to manage multiple monthly payments. Also, a debt consolidation loan with a reasonable interest rate helps you pay down your debt more quickly by reducing your overall interest costs.

However, consolidating debt is only recommended if you have good credit and qualify for a lower interest rate. Be sure to compare interest rates, loan terms and fees before choosing a loan.

How does debt consolidation work?

Debt consolidation works by taking out a new loan to pay off multiple current debts. The new loan typically has a lower interest rate than the existing debts, so you can save money on interest payments over time. The lender will assess your credit score and income to determine if you qualify for the loan and to establish the specific conditions of your loan.

You can find more details in the section How do debt consolidation loans work?

What is the best debt consolidation company?

Choosing the best debt consolidation company depends on your priorities. Among the best debt consolidation companies, we found that LightStream is a good choice for consolidating a large debt. For smaller loans, PenFed is a good option. If you are looking for a one-stop shop, Fiona offers debt consolidation loans for all types of credit and allows you to compare top lenders in one place.

How We Chose the Best Debt Consolidation Loans

To select the best debt consolidation loans, we took into consideration the following:

  • Rates. We chose lenders that offered some of the lowest APRs on the market.
  • Variety of loan terms. We favored lenders that offered a wide array of repayment terms, from six months to more than five years.
  • Customer service. The best debt consolidation lenders should have accessible customer service and loan specialists, as well as a variety of ways to reach them — phone, email and chat.
  • Streamlined application process and fast funding. While some lenders do require customers to call or visit a bank branch, we favored those that made the application and funding process as quick and painless as possible.
  • Less or no fees. Most lenders charge fees; we looked for those that charged the least, if at all.

Summary of Money’s Best Debt Consolidation Loans of September 2023