9 of the best debt consolidation companies

Lower your total cost or monthly payment with better terms and rates. (iStock)

You may have debt across several credit cards or have other forms of debt, like from unexpected medical bills or home improvement projects. As interest rates have come down, now could be a good time to take out a personal loan to consolidate your multiple forms of debt into one balance.

If you decide debt consolidation is the right step, it’s important to shop around for the best type of personal loan, rates and terms. Fortunately, Credible makes it easy to compare loan rates and companies.

By taking out a personal loan for debt consolidation, you could lower your monthly payments and total cost by avoiding multiple interest rates and late fees. In fact, recent data from the Federal Reserve found, in the first quarter of 2020, the average credit card rates was 16.61 percent while the average interest rate for a 24-month personal loan was 9.63 percent.

You can take advantage of an online personal loan calculator to determine costs. Below is a list of some of the best lenders for you to consider.

1. Axos Bank

If you have good or excellent credit, you might consider Axos Bank, which offers unsecured loans and a variety of terms. Axos has no prepayment penalty and funding is fast.

Borrowers with a high amount of debt to refinance, however, may need to keep looking. Axos limits loans to $35,000, which is lower than some other lenders. The lender also requires a minimum credit score of 740, which could exclude some borrowers.

Axos’ requires a soft credit check. Terms are up to five years, with no prepayment penalty.

  • Loan amount: $5,000 to $35,000
  • Loan terms (years): 1, 2, 3, 4, 5
  • Discounts: None
  • Time to get funds: Next business day

Compare loans provided by Axos and other online lenders through Credible today.

2. LightStream

LightStream, the online lending division of SunTrust Bank, offers large loan limits to qualified borrowers, which can be helpful if you have debt as high as $100,000. The lender doesn’t charge fees, and funding is fast.

However, LightStream doesn’t disclose its minimum income requirement, which makes it difficult to know if you will qualify. Also, loans are not available for residents of Rhode Island and Vermont.

LightStream requires a minimum credit score of 660. The lender doesn’t require a soft credit pull and doesn’t charge fees. Terms are up to seven years.

  • Loan amount: $5,000 to $100,000
  • Loan terms (years): 2, 3, 4, 5, 6, 7
  • Discounts: Autopay
  • Time to get funds: As soon as the same business day

Compare loans provided by LightStream and other online lenders through Credible today.

3. Marcus

Marcus approves would-be borrowers with lots of information before applying, which can help you determine whether you’ll qualify. Borrowers need a minimum annual income of $30,000 and a credit score of 660. The lender doesn’t charge fees and has relatively fast funding, compared to some other institutions. They also operate across all 50 states, as well as U.S. territories, protectorates, and armed forces abroad.

If you wanted to consolidate your debt with another person, however, Marcus doesn’t offer joint applications. 

Terms are available up to seven years. Marcus offers loan amounts from $3,500 to $40,000, with no fees.

  • Loan amount: $3,500 to $40,000
  • Loan terms (years): 3, 4, 5, 6, 7
  • Discounts: Autopay
  • Time to get funds: As little as five days

Compare loans provided by Marcus and other online lenders through Credible today.

4. Happy Money, formerly known as Payoff

If you’ve got several kinds of debt, Happy Money, formerly known as Payoff, may be a good lender for you. It specializes in debt consolidation, and their loans can only be used for that purpose. The lender offers competitive rates and no prepayment penalty.

If your debt totals more than $35,000, however, you’ll need to find another lender. Happy Money, formerly known as Payoff, is also slower to fund the loan that some other lenders, and they charge an origination fee. In addition, loans aren’t available to residents of Massachusetts, Maryland, Mississippi, Nebraska, Nevada, Ohio, and West Virginia.

To qualify for a loan from Happy Money, formerly known as Payoff, you need a minimum credit score of 640. Terms range from two- to five-year loans.

  • Loan amount: $5,000 to $35,000
  • Loan terms (years): 2, 3, 4, 5
  • Discounts: None
  • Time to get funds: As soon as 2 to 5 business days after verification

Compare loans provided by Happy Money, formerly known as Payoff, and other online lenders through Credible today.

5. Prosper

Prosper is a unique type of lender. The peer-to-peer platform matches borrowers with investors. Once your loan is listed, investors can commit to funding it. If you don’t receive your full amount after 14 days, no loan is made. One of the biggest advantages to Prosper is that it doesn’t require a minimum income, and the minimum required credit score is just 640.

The downside is that the process can take longer than other lenders. Also, Prosper charges an origination fee of up to 5 percent, and residents of Iowa, North Dakota, and West Virginia cannot apply.

Prosper offers three- and five-year terms. Qualifying does require a soft credit check.

  • Loan amount: $2,000 to $40,000
  • Loan terms (years): 3, 5
  • Discounts: None
  • Time to get funds: An average of five days after accepting your offer

Compare loans provided by Prosper and other online lenders through Credible today.

6. SoFi

SoFi is another option if you have a large amount of debt. It offers loans up to $100,000 for people with good or excellent credit. SoFi also offers perks to its customers, including career coaching and members-only events. And the lender doesn’t charge fees on its loans.

However, it may be harder to qualify for a loan from SoFi than from some other lenders as the company doesn’t disclose its minimum credit score or income requirements.

Terms are available up to seven years, which can be a helpful repayment period for large loans. Also, SoFi does require a soft credit check.

  • Loan amount: $5,000 to $100,000
  • Loan terms (years): 2, 3, 4, 5, 6, 7
  • Discounts: Autopay
  • Time to get funds: 3 business days

Compare loans provided by SoFi and other online lenders through Credible today.

7. Upgrade

Borrowers with fair credit might consider Upgrade. The online lending platform requires a credit score of 600, which is lower than some other lenders. Upgrade offers tools that can help you protect or improve your score, such as free credit monitoring, alerts and financial education.

One of the downsides to Upgrade, though, is that it charges an origination fee of up to 6 percent. Also, customer service is only available by email. In addition, residents of Connecticut, Colorado, Iowa, Maryland, Vermont and West Virginia aren’t eligible.

Upgrade offers terms of three or five years. Upgrade does require a soft credit check.

  • Loan amount: $1,000 to $35,000 ($3,005 minimum in GA; $6,005 minimum in MA)
  • Loan terms (years): 3, 5
  • Discounts: Autopay
  • Time to get funds: Within a day of clearing necessary verifications

Compare loans provided by Upgrade and other online lenders through Credible today.

8. Avant

If you’re just starting your career, Avant is an online lending platform that has modest requirements. To qualify, borrowers need a minimum credit score of 580 and an annual income of $24,000. The lender also offers fast funding and no prepayment penalty

One of Avant’s drawbacks is that it charges an origination fee of up to 4.75 percent. And its services aren't available everywhere: residents of Colorado, Connecticut, Hawaii, Louisiana, Nevada, New York, South Carolina, Vermont, and West Virginia aren’t eligible.

Avant offers terms that range from two to five years. Rates here are some of the highest. You can qualify for a discount if you use autopay.

  • Loan amount: $2,000 to $35,000
  • Loan terms (years): 2, 3, 4, 5
  • Discounts: Autopay
  • Time to get funds: As soon as the next business day

Compare loans provided by Avant and other online lenders through Credible today.

9. Upstart

Upstart is an online lending platform that secures loans through lending partners. The evaluation process includes a soft check of your credit score. The lender also looks at your education, major, and job history, which could be helpful for college students and graduates.

Upstart does have a high origination fee—up to 8 percent. Also, the lender doesn’t offer borrowers any discounts, such as for setting up autopay.

Terms that are offered range from three to five years. Upgrade doesn’t charge a prepayment penalty.

  • Loan amount: $1,000 to $50,000
  • Loan terms (years): 3 to 5 years
  • Discounts: None
  • Time to get funds: As soon as 1 to 3 business days

Compare loans provided by Upstart and other online lenders through Credible today.

Other personal loan lenders to consider

In addition to these lenders, there are nine others you can consider for consolidating your debt. These lenders are not offered through Credible, though, which means you cannot easily compare their rates as you can with Credible’s partner lenders.

  1. Citizens Bank
  2. Discover
  3. Earnest
  4. HSBC
  5. Laurel Road
  6. One Main Financial
  7. PenFed Credit Union
  8. PNC
  9. Rocket Loans

Bottom line

Make sure you look at rates, terms, and details like fees and perks before you sign on the dotted line for a new personal loan.

Doing your homework takes time, but Credible makes it easy to check rates from multiple lenders. Fill out a single form to request rates from multiple lenders. The process won’t affect your credit score, and you can compare offers to find the best lender. With the best rate and terms, you can work to eliminate debt as fast as possible.

Debt consolidation FAQs

Here are answers to some frequently asked questions about debt consolidation.

How does debt consolidation work?

Debt consolidation begins with taking out a low-interest loan, applying for a balance transfer credit card, a cash-out mortgage refinance, or another type of consolidation product. You’ll then use the money to pay off your existing high-interest debts. 

These might include car loans, personal loans, and credit cards. In return, you’ll have one monthly payment to manage instead of many. If you have good credit, you’ll likely get a lower interest rate and better terms, which can make it easier to manage your budget.

What’s the difference between debt consolidation and debt settlement?

Both debt consolidation and debt settlement are effective methods for tackling outstanding debt. The terms are often used interchangeably, but they have some key differences: 

  • Debt consolidation — Debt consolidation rolls several existing debts — such as high-interest credit card balances, medical bills, and car loans — into one loan with a single monthly payment, preferably with better rates and terms. Debt consolidation loans, balance transfer credit cards, and home equity lines of credit are just a few methods you can use to consolidate debt. 
  • Debt settlement — With debt settlement, you typically work with a nonprofit credit counseling agency or a debt settlement company to negotiate a settlement to pay less on any outstanding balances than what you currently owe. You can also negotiate with creditors or lenders on your own, though there’s no guarantee they’ll accept a settlement. And if you do settle your debt for less than you owe, it can show up on your credit reports and damage your credit.

What’s a good APR for a debt consolidation loan?

The APR on a debt consolidation loan depends on your credit score and other financial factors, like your credit history, employment, and income. The average APR on a 24-month personal loan was 9.41% as of February 2022, according to Federal Reserve data.

If you have good to excellent credit, you’ll typically receive the best rates a lender has to offer. But if your credit needs some work, you’ll likely pay a higher interest rate to borrow money.

What are the benefits of a debt consolidation loan?

When you’re struggling with overwhelming debt, consolidating your payments can be a lifesaver, if done right. Here are some benefits of a debt consolidation loan, which is a type of unsecured personal loan: 

  • Streamlines your debt — Juggling multiple payments and due dates can be challenging. A debt consolidation loan streamlines your debt into a single monthly payment, which can be easier to budget for.
  • May get a lower interest rate — If you’re able to get a lower interest rate, it could lower your monthly payment and help you pay down your debt sooner.
  • Can improve your credit — Your payment history is the most important factor that makes up your credit score. If you repay your debt consolidation loan on time each month, you can build credit over time.

What are the drawbacks of a debt consolidation loan?

Although debt consolidation has many benefits, it also comes with a few drawbacks you’ll want to consider: 

  • May not stop overspending — If you’re tempted to keep making purchases with your credit cards after you pay them off, managing new credit card payments on top of a debt consolidation loan payment won’t help you get out of debt, and could even make your situation worse. 
  • May not receive a lower rate — If your credit hasn’t improved since you took out your existing debt, you may not qualify for a lower rate on a debt consolidation loan, which wouldn’t save you money in the long run.
  • May not qualify — If you have poor credit, qualifying for a low-interest personal loan to consolidate debt may be challenging.  

Should you get a balance transfer credit card or debt consolidation loan?

That depends. With a balance transfer credit card, you may be able to get a 0% interest introductory offer for a set period of time. If you can pay down the balance before the intro offer expires, you can focus on putting more money toward your debt. But if you still have a balance when the intro offer expires, you’ll start accruing interest at the card’s regular rate, which can be high. Balance transfer cards can also come with fees, and you’ll typically need good credit to qualify for one.

It may be easier to qualify for a debt consolidation loan, but you’ll need good credit to qualify for the best rates. If you’re having trouble getting approved, consider applying for a personal loan with a cosigner who has good credit. Just make sure they understand they’ll be on the hook for making payments if you aren’t able to. Debt consolidation loans can be a good option since they give you just one payment to manage, and they often have lower interest rates than credit cards.

Kathryn Pomroy contributed to the reporting of this article.