The Best Debt Consolidation Loans

Debt consolidation loans fold high-interest debt from several sources into a single, manageable payment with a lower interest rate, ultimately helping you pay off everything faster. But the best loans aren’t just the ones with the lowest interest rates — they should offer you the amount of money you need with minimal fees, helpful resources, and excellent communication. The better your credit score, the more options you'll have, but we've picked out lenders with a range of requirements so you can find the one that's best for you.

The 6 Best Debt Consolidation Loans

Best for Average Credit
Prosper
Pros
Easy pre-approval process
Clear communication
Maximum debt-to-income ratio
Cons
Inflexible payment schedule
Higher income and FICO score

Why we chose it

Easy pre-approval process

Like most of our picks, Prosper’s pre-approval process is extremely simple, asking for name, address, credit score and income, rather than more obscure categories like “taxable income” that showed up in some of our finalists’ sign-up boxes. Once you’ve entered your information and been pre-approved, Prosper lets you evaluate available loan options by payoff period, monthly payment, and loan amount to make sure you’re happy with what you’re getting.

Clear communication

As part of our testing, we applied for loans with each of the lenders. Prosper denied us, but explained to us in transparent terms the reason our tester had been declined. That gave us some insight into whether it was a problem we could fix, either by building up our credit history, or finding a co-signer, rather than leaving us wondering what happened. In our tester’s case, the reason given was having “too few open trades,” meaning she may not have had enough open credit cards to qualify.

Lenient debt-to-income ratio

Prosper is more lenient about debt-to-income ratios than our other top picks. Most companies cap DTI around 30%, but Prosper will consider borrowers as long as your DTI ratio is lower than 50%. If you have decent credit but are running a little high on debt, we recommend looking into Prosper’s loans.

Points to consider

Inflexible payment schedule

Prosper is a little less flexible than some of our other top picks in this area. Unlike its most similar competitor, Lending Club, Prosper sets the due date for your monthly bill, and you’re not able to change it without consulting Prosper. If you miss a payment, you’ll be charged a late fee of either 5% of the unpaid installment or $15, whichever is greater.

Higher income and FICO score

There is no minimum income amount required, however, the average annual income for borrowers was a little more than $98,000, based on data collected between March and August, 2018. The company’s minimum credit score is also 640, but the average for users is around 710 — which is something to consider before applying, especially if you’re near the company’s minimum credit score requirement.

Best for Average Credit
Lending Club
Lending Club
Pros
Easy pre-approval process
Low minimum APR
Flexible loan amounts
Cons
2016 controversy
Extra fees

Why we chose it

Easy pre-approval process

We found Lending Club’s pre-approval process to be just as painless as Prosper’s. You’ll just need to provide your birthday, address, and annual income, without having to figure out more complex information like taxable income.

It’s worth mentioning that Lending Club may have stricter borrower requirements than some of our other top picks for average credit, as the average Lending Club borrower holds a FICO score of around 700 and a debt-to-income (DTI) ratio of about 12%. The maximum DTI is 30%, so if you’re carrying more than this, you’ll want to consider another lender.

Low minimum APR

At only 6.16%, Lending Club has one of the lowest minimum APRs we saw. However, that doesn’t mean you’ll necessarily pay that rate — you’ll need a high credit score to qualify for the minimum APR — but we appreciated that rates started so low. LendingClub has a maximum APR of 35.89%, which is slightly lower than Prosper, but still at the higher end of our top picks.

Flexible loan amounts

Lending Club offers loans up to $40,000, which is fairly average for our top picks. (Both Marcus and Prosper go up to $40,000). While this isn’t as high as some other lenders — SoFi goes up to $100,000, and Upgrade goes to $50,000 — we still thought it was a great option for those with average credit scores looking for bigger loans. LendingClub also holds one of the lowest minimums of any of our top picks at $1,000 (along with Marcus and its $1,000 minimum), meaning you don’t have to take on more debt than you really need.

Points to consider

2016 Controversy

Lending Club has received a lot of media attention since it was formed in 2007, and not always for the most flattering reasons. In 2016, news broke that the CEO was involved in padding reported loan volume and splitting loans to make them appear less risky to investors. This controversy affected investors more than borrowers, with stock prices falling 34% at the time. For borrowers, not much has changed — the CEO has been replaced, and the company continues to offer the same services, although some analysis suggests that Lending Club might be raising its standards, becoming less willing to lend to people with very low credit scores. Data from 2018 reflects this trend, as lower-grade loans continue to wane.

Extra fees

Lending Club charges a higher check processing fee than some of our other contenders, meaning it will cost you $7 each time you pay your bill with a check rather than electronically. So if you prefer checks, you could be shelling out $84 extra dollars a year in fees. It also has steeper origination fees than other companies we saw, ranging all the way up to 6% (as opposed to Prosper’s 5% or Marcus’s 0%).

Best for Average Credit
Marcus by Goldman Sachs
Pros
No fees
Low maximum APR
Customer service
Easy pre-approval process
Cons
Higher minimum APR

Why we chose it

No fees

Marcus promises “$0 fees. Ever.” The company doesn’t charge origination, late, or unsuccessful payment fees. This doesn’t necessarily mean it will be the cheapest loan you can find — you’ll want to compare APR and interest rates as well — but it’s a nice perk and helps ensure that you know exactly what you’ll be paying each month. No need to worry about factoring fees into your budget if you miss your payment window by a couple of days.

Lower maximum APR

Marcus’s maximum APR was much lower than other lenders in serving customers with average credit. Rates only go up to 24.99%, compared to around 36% for both Prosper and Lending Club.

Customer service

We also appreciated Marcus’s extremely courteous customer service. When we called to ask questions about our loan terms, we only had to wait a couple of seconds before being put directly through to a live representative. Once we did get through, the agents seemed genuinely invested in answering our questions and never once nudged us into getting a loan.

Easy pre-approval process

Like our other top picks, Marcus’s pre-approval process can be completed in about five minutes and only requires general background info, like income, credit score, and monthly housing costs.

Points to consider

Higher minimum APR

The minimum APR on Marcus’s debt consolidation loans was a little higher than most of our top picks (6.99% versus Lending Club’s 6.95%). Still, we considered that one percentage point difference to be fairly negligible when you consider the maximum APR is about 11 percentage points lower than those other two.

Best for Low Credit
Upgrade
Pros
Low minimum credit score
Educational resources
Flexible loan amounts
Cons
Newer company

Why we chose it

Low minimum credit score required

Upgrade requires a low minimum credit score of 620 to apply for a loan — second only to Avant’s 580 — making it a great choice for those with less-than-stellar credit. But be aware that more than just credit score is taken into account.

Educational resources

We loved how Upgrade provides a number of free educational resources on its website to help you make smart financial decisions. Its Credit Health Insights page is full of useful articles and videos that can help you do things like improve your credit score, fix an error on your credit report, and figure out how to pay off large debts. The company also offers an effective credit score simulator, so you can see exactly how different scenarios affect your score.

Flexible loan amounts

Upgrade offers loans from $1,000 to $50,000, one of the widest ranges we saw among our top picks. The only one of our top picks that went higher was SoFi, which provides loans all the way up to $100,000.

Points to consider

Newer company

Upgrade is fairly new to online lending, having opened its doors in April 2017. The company was begun by two of Lending Club’s original co-founders, Renaud Laplanche and Soul Htite, after they were forced to resign following a 2016 controversy involving padding reported loan volume and splitting loans to make them appear less risky to investors. Ultimately, we weren’t incredibly concerned about this history. The inaccuracy at Lending Club was fairly minor, and although it has only been around for little more than a year, Upgrade has received overwhelmingly positive reviews, with an A rating from the BBB.

Best for Low Credit
Avant
Pros
Lowest minimum credit score required
Cons
Mobile app
Customer reviews
High minimum APR

Why we chose it

Lowest minimum credit score required

In general, the lower your credit score, the fewer options you have when it comes to obtaining a loan. At 580, Avant’s minimum credit score is a full 40 points lower than Upgrade’s, making it (theoretically) accessible to the roughly 80% of Americans who have scores above 600. So, if your credit score lingers toward the bottom of this range, Avant is your best bet.

After paying off your loan in-full, you can also become eligible to refinance your loan, which could land you more funds or a lower APR.

Points to consider

Mobile app

Along with SoFi, Avant was one of only two of our top picks to come with a mobile app, theoretically making it simple to view and manage loan payments. Unfortunately, it’s received a number of negative reviews, with the most common issue being frequent crashing. Still it has a 3.5* rating on 563 Google Play reviews, and 3* out of 41 ratings in the App Store. Those aren’t the most reassuring scores, to be sure, but we still appreciated that Avant thought to include a mobile app, even if there are some kinks left to work out.

Customer reviews

The number of one-star reviews for Avant surpasses any other loan company on ConsumerAffairs. Most of these reviews complain about an non-intuitive process and a lack of customer support. While no two customer experiences are going to be the same, the overall sentiment was lower for Avant than it was for our other top picks.

High minimum APR

At 9.95%, had by far the highest minimum APR of any of our top picks. Marcus was the next closest at 6.99%, and most of them stayed between 5% and 6%. However, APR doesn’t tell the whole story of a loan — additional fees could significantly increase what you end up paying — but this was still higher than we would have liked. It’s not like Avant offsets with a low maximum APR, either — its 39.99% maximum ties Prosper for the highest APR.

Best for Excellent Credit
SoFi
Pros
Great terms for borrowers with high credit scores
Networking opportunities
Mobile app
No fees
Cons
Targeted towards affluent borrowers

Why we chose it

Great terms for borrowers with high credit scores

SoFi takes care of its customers: Its $5,000–$100,000 loan range and max fixed 14.87% APR (with AutoPay) blow our other top picks out of the water. Granted, you'll have to jump through higher hoops to get those terms. SoFi doesn’t list a minimum credit score, but we chatted with a member of SoFi’s public relations team who confirmed that SoFi borrowers generally have scores above 700.

Networking opportunities

The name Social Finance comes from the fact that SoFi actually has a networking component, complete with career coaching and in-person events. It clearly caters to the educated and financially ambitious, with features like an entrepreneur program and a specific MBA loan. It also has a feature called Social Comparison, which shows where you fit into the bigger picture of borrowers and lenders.

Mobile app

SoFi has received much more positive feedback on its mobile app than Avant has. It has a rating of more than four stars on 187 ratings in the Google Play store, with most users having pretty positive feedback on the app’s functionality. It’s a little more spotty on the App Store — 3.1 stars on 75 ratings — with a lot of complaints saying that SoFi only lets you view your loan amount, without letting you do anything to manage your account on the app. Still, we preferred an imperfect mobile app rather than not even having one.

No fees

Like Marcus, SoFi doesn’t charge any of the fees that are standard with debt consolidation lenders. There is no origination fee, no charge if a payment fails to go through, and as of April 2018, no late payment fee. That doesn’t mean you’ll necessarily be paying less over the entirety of your loan period — again, it’s best to check terms from a few companies — we just appreciate that SoFi doesn’t stack fees on top of the APR you’re already paying.

Points to consider

Targeted towards affluent borrowers

SoFi, short for Social Finance, was originally designed for student loan financing — and even though it has expanded its products to include personal loans and mortgages, its target demographic remains the same: individuals with high incomes, or recent grads that have high earning potential. The pre-approval application process includes questions about your alma mater, major, advanced degrees, and income. While this can result in better terms than most companies, it can also be frustrating if you don’t meet SoFi’s high standards.

How to Find the Best Debt Consolidation Loan

Decide on the loan amount and repayment plan you need

There’s no such thing as the right debt consolidation loan amount or payback plan for everybody. “It’s all going to be relative to your income and ability to repay, so there’s really no limit to it,” debt attorney Chad Van Horn told us. “If you’re making $500 or $600 a month, a $1,000 loan may seem like you’ll never be able to pay it off. But if you’re making $10,000 per month, it’s the $100,000 loan that may seem like you’ll never be able to pay it off.” It’s important to have a good idea what you’re looking for going in. All our top picks offer two or three repayment period plans (three- and five-year plans are the most common) and range from $1,000 to $100,000.

Evaluate potential fees

In addition to the costs included in your APR, your loan will likely come with other small fees. These vary from lender to lender, but should be both fair and absolutely transparent. The most common are fees for late and unsuccessful payments, prepayments (making a payment early), and check processing. Keep in mind that even if a company doesn’t have any of these fees, it’s not necessarily a better deal — it just means that the company makes all its money through interest. No matter what, it’s still important to compare your quoted APR against offers from other companies.

Compare rates

“The best way to find the best loan is to try a few different companies and actually go through the process of applying to see the official rate you would be getting,” says Erik Kroll, a certified financial planner with Hilltop Financial Advisors. “Then you can calculate the total cost of the loans — including any fees — and weigh your options by comparing the monthly payment, how long the loan will last, and how much total interest you’ll pay.” The only problem? Because rates vary depending on your individual profile, you can’t simply check a price list. Shopping around for a loan requires you to hand over personal information and (this is the big one) have your credit checked. That’s where our next step comes in.

Avoid companies that use a “hard pull” to check your credit

There are two different ways that lenders can check your credit, and one is less intrusive than the other. A hard inquiry, or hard pull, can lower your credit score, whereas a soft inquiry, or soft pull, won’t. “A hard pull is the most definitive way to assess a borrower’s risk profile, while soft pull data is less complete and typically older info used for pre-qualification purposes,” explains Ben Woolsey, president and general manager of CreditCardForum.

Hard pulls are necessary for certain financial transactions, including officially closing the deal on a personal loan — you’ll suffer a hard pull eventually. But some (like LightStream or Rocketloans) require one at the very beginning of the process before you’re even able to see what rate you qualify for.

The issue is that hard pulls can signal that you’re desperate for credit and may be trying to spend beyond your means — and your credit score will drop by a few points. Granted, there’s an exception called “rate shopping,” which lumps all hard pulls within 45 days for the same kind of loan into one. But there’s always the chance that, after comparing rates, you’ll decide against taking out a personal loan. (Or, it may turn out that you don’t qualify for one at all.) In those cases, it’s better to walk away without having dinged your credit score for no reason. “My advice to consumers would be to utilize soft pull options whenever possible, and understand their credit score and credit costs/options to the fullest extent possible before initiating any full applications that involve a hard pull,” Woolsey told us.

Consolidate credit card debt without a loan

Loans aren’t the only route you can take when it comes to paying off debt. One alternative is transferring debt onto a credit card with a 0% introductory balance transfer APR, that way you can evade interest altogether. However, you need to make sure you don’t miss any payments (you aren’t invincible to those penalty APRs) and pay debt before the introductory offer ends, which typically lasts around a year.

Debt Consolidation Loan FAQ

What’s the difference between APR and interest rate?

These two attributes are related, but they’re not the same. APR (short for annual percentage rate) is more comprehensive, including both your interest rate and origination fee. Each loan likely has different interest rates and origination fees, so APRs make it easier to compare two offers (think apples to apples, rather than two fruit salads with different grape-to-melon ratios).

Say you’re comparing two $5,000 loan options. One comes with 10% interest and a 3% origination fee. The other comes with 13% interest, but no origination fee. At a glance, it’s tough to know which one is a better deal. Knowing the APRs lets you make a one-to-one comparison. Lenders will provide you with an APR, but you can also calculate it yourself with a calculator like this one. When we enter the data for the options above, we can see that the first loan has an APR of about 12%. The second maintains its 13% APR. Provided other terms look good, the first is the better deal.

Say you’re comparing two $5,000 loan options. One comes with 10% interest and a 3% origination fee. The other comes with 13% interest, but no origination fee. At a glance, it’s tough to know which one is a better deal. Knowing the APRs lets you make a one-to-one comparison. Lenders will provide you with an APR, but you can also calculate it yourself with a calculator like this one. When we enter the data for the options above, we can see that the first loan has an APR of about 12%. The second maintains its 13% APR. Provided other terms look good, the first is the better deal.

What are some other debt consolidation options?

If you already have a great relationship with a bank or credit union — or have heard good things about one by word of mouth — we absolutely recommend checking to see what kinds of loan it can offer you. Credit unions in particular have some great rates for those who qualify.

One of the best we found during our research was USAA, a military credit union that covers not just military members, but also their families — even down to grandchildren and beyond (provided that their parents have USAA insurance). Its APRs for debt consolidation loans max out at 10.99%, which only one other of our contenders (Western Credit Union) could match. Saxman, who has USAA car insurance, highly recommends it, along with the similar Navy Federal Credit Union.

Does a lender need to be FDIC-insured?

Not necessarily. Of our top picks, Marcus, Lending Club, and Avant are backed by the FDIC, but when we asked our experts whether this mattered, the answer was a unanimous no. While insurance from the FDIC is crucial for savings accounts, when you take out a loan, you’re not counting on a bank or company to safeguard your money. If your lending company goes out of business, another company will buy out its loans, and you’ll pay that new lender instead.

How do I calculate my DTI ratio?

You can check your DTI ratio with this handy calculator. For example, if your gross monthly income is $8,000 and you typically carry $3,000 worth in debt per month, your DTI would be 38%. The lower your DTI, the more likely lenders are to see you as a qualified candidate.

Does a good credit score guarantee I’ll get approved for a loan?

Even if you have the right credit score to qualify, you still might not get approved for a loan. We discovered this firsthand: One of our testers who has an Excellent credit score was denied a loan from both Prosper and Avant. In its denial email, Prosper explained that her credit history indicates she had “too few open trades,” and shuttled her to a loan broker partner called AmOne to shop around for other options. AmOne said she was a good match for SoFi, but SoFi denied her loan request as well, and recommended she try Avant. Avant denied her and sent her back to AmOne, which again recommended SoFi. A whirlwind — and no loan.

Another tester was approved for Prosper, but denied by Avant. A third tester was denied by Prosper, but approved for Avant. Like we said, you’re going to need to shop around.

The Best Debt Consolidation Loans: Summed Up

Best For Minimum Credit Score Loan Amounts Loan Periods APR
Prosper Average Credit 640 $2,000 - $40,000 3 or 5 years 6.95% - 35.99%
Lending Club Average Credit 640 $1,000 - $40,000 3 or 5 years 6.95% - 35.89%
Marcus Average Credit 660 $3,500 - $40,000 3 - 6 years 6.99% - 24.99%
Upgrade Low Credit 620 $1,000 - $50,000 3 or 5 years 6.99% - 35.97%
Avant Low Credit 580 $2,000 - $35,000 2 - 5 years 9.95% - 35.99%
SoFi Excellent Credit ~700 $5,000 to $100,000 3 - 7 years 6.990% – 14.865%

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