Best Debt Consolidation Loans for 2020

When you’re drowning in debt, it can feel like there’s no way out when interest keeps mounting with every passing day. A debt consolidation loan will replace all of your debts with one single loan, monthly payment and interest rate to help you keep track of your debt payoff journey. The best debt consolidation loans have low interest rates, flexible loan amounts and longer terms to help you save money in the long run.

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    In this article

      We use our proprietary SimpleScore methodology to weigh your available options and find the very best lenders for easy consolidation loans that will eliminate your debt with the lowest rates.

      The best debt consolidation loans of 2020

      Debt consolidation loans at a glance

      LenderAPRLoan AmountTermsFees
      LendingClub10.68%–35.89%$1,000–$40,0003–5 yearsOrigination and late fee
      Prosper5.32%–35.97%$2,000–$40,0003–5 yearsOrigination fee: 2.4% to 5%
      PersonalLoans.comVaries$1,000–$35,00090 days–6 yearsVaries by lender
      LightStream5.95%–19.99%$5,000–$40,0003–5 yearsNo fees
      Avant9.95%–35.99%$2,000–$35,0002–5 yearsAdministrative fee: 4.75%
      Upstart4.66%–35.99%$1,000–$50,0003–5 yearsOrigination and late fee
      OneMain18%–35.99%$1,500–$20,0002–5 yearsOrigination and late fee
      Best Egg5.99%–29.99%$2,000–$35,0003–5 yearsOrigination and late fee

      *Rates accurate as of July 24, 2020

      Best Peer-to-Peer Lending – LendingClub

      Lending Club is the largest online lender with its own easy grading system that will determine your rates.

      APR Range
      12.15%–29.97%
      Loan Amount
      $5K–$500K
      Term
      1–5 years
      SimpleScore
      2.6 / 5.0
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      SimpleScore LendingClub 2.6
      Median APR 3
      Loan Size 4
      Product Variety 1
      Resources 2
      Fees 3

      Lending Club has a minimum credit score of 600, and there is a joint loan option that’s especially helpful if your credit score needs some help. You can even qualify with a soft credit check, so there’s no damage to your credit score if you don’t get approved or decide not to move forward. You can apply online in just minutes, but you’re going to have to be patient with processing since most customers don’t receive funding until after four days or more.

      Best Bad Credit Marketplace – PersonalLoans.com

      When you’re struggling with bad credit, PersonalLoans.com gives the flexibility you need.

      APR Range
      5.99%–35.99%
      Loan Amount
      $500–$35K
      Term
      90 days–72 months
      SimpleScore
      3.8 / 5.0
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      SimpleScore PersonalLoans.com 3.8
      Rates 2
      Loan Size 5
      Customer Satisfaction N/A
      Support 3
      Fees 5

      PersonalLoans.com falls among the lower median of the interest rates here, which is surprising given that it caters to a crowd with less-than-stellar credit. You also have the option to choose payments twice a month to pay off your loan even faster.

      Best Debt Consolidation Lender for Great Credit – LightStream

      You can find yourself debt-free after saving a fortune on fees with debt consolidation from LightStream.

      APR Range
      2.49%–19.99% w/AutoPay
      Loan Amount
      $5K–$100K
      Term
      24–84 months
      SimpleScore
      4.8 / 5.0
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      SimpleScore LightStream 4.8
      Rates 5
      Loan Size 5
      Customer Satisfaction 4
      Support 5
      Fees 5

      You will need great credit if you plan to work with LightStream for a low-interest consolidation loan. The website indicates that you need a minimum credit score of 660 and a pretty spotless payment history. If you can meet those requirements, you could be rewarded handsomely.

      LightStream Disclosure

      Disclaimer: Your loan terms, including APR, may differ based on loan purpose, amount, term length, and your credit profile. Excellent credit is required to qualify for lowest rates. Rate is quoted with AutoPay discount. AutoPay discount is only available prior to loan funding. Rates without AutoPay may be higher. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice.

      Payment example: Monthly payments for a $10,000 loan at 4.99% APR with a term of 3 years would result in 36 monthly payments of $299.66

      © 2020 Truist Financial Corporation. SunTrust, Truist, LightStream, the LightStream logo, and the SunTrust logo are service marks of Truist Financial Corporation. All other trademarks are the property of their respective owners. Lending services provided by Truist Bank.

      Best for High-Income Earners – Best Egg

      Best Egg simplifies the process with an easy online quote process and an even faster approval process.

      APR Range
      5.99%–29.99%
      Loan Amount
      $2K–$35K
      Term
      3–5 years
      SimpleScore
      3.8 / 5.0
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      SimpleScore Best Egg 3.8
      Rates 4
      Loan Size 5
      Customer Satisfaction N/A
      Support 3
      Fees 3

      Best Egg is an all-around great choice for debt consolidation, simplifying the loan process so you can begin tackling your debt immediately. You only need average credit to take advantage of the better rates currently available, and Best Egg won’t pull your credit before giving you a quote. With 24-hour loan approval and 72-hour funding, it makes it pretty easy to handle debt consolidation. However, to secure the best rates with Best Egg, you’ll need to earn $100,000 a year.

      Best Egg Disclosure

      Best Egg loans are unsecured personal loans made by Cross River Bank, a New Jersey State Chartered Commercial Bank, Member FDIC, Equal Housing Lender. “Best Egg” is a trademark of Marlette Funding LLC. All uses of “Best Egg” on this site mean and shall refer to “the Best Egg personal loan” and/or “Best Egg on behalf of Cross River Bank, as originator of the Best Egg personal loan,” as applicable. Loan amounts generally range from $2,000-$35,000. Offers up to $50,000 may be available for qualified customers who receive offer codes in the mail. The minimum individual annual income needed to qualify for a loan of $50,000 is $130,000. Borrowers may hold no more than two open Best Egg loans at any given time. In order to be eligible for a second Best Egg loan, your existing Best Egg loan must have been open for at least six months. Total existing Best Egg loan balances must not exceed $50,000. All loans in MA must exceed $6,500; in NM and OH must exceed $5,000; in GA must exceed $3,000.

      What is a debt consolidation loan?

      It is all too easy to fall down the rabbit hole of debt. One debt becomes another and then another, and before you know it, you are so buried in debt that you don’t see the way out. When your debt grows wildly out of control, a debt consolidation loan can be a great solution to resolve your debt in one fell swoop. By taking out one big loan, you can pay off all of your existing debts and only have to worry about one loan going forward. A debt consolidation loan can also reduce the amount you pay each month and also shorten the total length of your financial obligations, so you get out of debt that much faster.

      How debt consolidation loans work

      When you have bad credit, you face far higher interest rates than if you have good credit. A debt consolidation loan is a personal loan that gives you a large sum upfront that you use to pay off your debt. From there, you only have to repay your loan for an easier, more convenient way to eliminate your debt. It can also restore your credit that much faster because there are not multiple debts being reported to the credit bureaus each month. Your new debt consolidation loan should offer a lower interest rate than those associated with your outstanding debt. Debt consolidation lenders use FICO scoring to approve or deny your loan, and while there are lenders who work with bad credit, you will have far more options available to you when you have excellent credit.

      What you need before applying

      Before applying for a debt consolidation loan, you should pull your credit report to see where you stand with your debts. Your report will also give you your credit score so you can decide which lenders are worth your time and which ones you shouldn’t even bother applying to. You also want to be sure that you are able to commit to the repayment terms with a steady source of income to make your payments on-time.

      How to get a debt consolidation loan

      Many lenders will allow you to prequalify using a soft credit check that won’t ding your credit. This will help you get a general idea of how much you can qualify for, as well as some of the other details regarding that particular lender’s loan. Every loan is different with its options; while many loans have terms of three to five years, you will find some lenders who offer shorter or longer terms. How much you can borrow will also depend on each lender, so if you are looking for a larger loan, you may not have as many options as if you were looking for a $5,000 loan. Fees are another area where lenders can vary; while some loans may carry steep origination fees or prepayment penalties, others may feature significantly lower fees or none altogether. The difference can amount to thousands of dollars over the life of your loan.

      How to choose the best debt consolidation loan for you

      1. Prepare your finances. Before you apply for a debt consolidation loan, it’s a great idea to comb through your credit report. Repaying your smaller debts can improve your credit score and allow for a much lower interest rate on your loan. You should also take this time to resolve any late payments so you borrow as little as possible for your debt consolidation loan.
      2. Itemize your debts. Before you can apply for a loan, you need to figure out how money you actually need. Create a detailed list of all of your debts and calculate the total to calculate the total for your loan.
      3. Consider your lender. While banks are the most traditional type of lender for a debt consolidation, they are far from your only choice. There are also online-based lenders who can provide faster, more efficient service, and credit unions can use their not-for-profit state to cater to those who struggle with their credit.
      4. Shop your options. It is important to still shop your options, even if you find that you prefer one kind of lender over another. You may be surprised by the rates that you find. The difference of just a few points can make an enormous difference in how much the loan will cost you, and you can save a ton of money if you can find a lender with low or no fees.
      5. Apply for a loan. There are certain things you will need to provide when you apply for a loan. Be prepared to provide personal identification and information regarding your employment. You may also have the option to add a co-signer to your loan so you can qualify for better rates.

      Alternatives to debt consolidation loans

      A debt consolidation loan is not your only option. You can pay off your debts using a few different methods. These may take longer but will cost far less than the interest that would accompany an installment debt consolidation loan.

      Check Your Personal Loan Rates

      Answer a few questions to see which personal loans you pre-qualify for. It’s quick and easy, and it will not impact your credit score.

      Get Started

      with our trusted partners at Bankrate.com

      These are some popular alternatives to debt consolidation loans.

      1. Snowball method
        If you want to pay down your debt yourself, the snowball method is a great way to tackle your debt. This means that you begin working from the smallest debt to the biggest, slowly working your way through all of your bills until they are resolved.
      2. Avalanche method
        If you will sleep better knowing that your biggest debts are paid, you may want to use the avalanche method. This method involves paying off the loans with the most interest first, so you tackle the largest, fastest-growing debt before it balloons out of control.
      3. Reorganizing budget
        Sometimes, all it takes is a little organization. If you feel that your debt is manageable, you could benefit from reorganizing your budget. Changing the way that you spend your money and tackle your debt could be all the change you need to eliminate your debt and get back on track.

      Debt consolidation loan FAQs

      Be sure that you have exhausted all options before committing to repayment terms that will last several years. A debt consolidation loan is great to make your debt more manageable or if you want to save on interest from multiple loans. Just make sure that you have the credit score to qualify and that you can make the monthly payments.

      Debt consolidation isn’t a good match for everyone. If you have a very low credit score, you may not qualify for a loan at all. You will also need to prove that you have a regular source of income, or you could be denied.

      Student loans are a popular reason to use a debt consolidation loan, and it uses a specific kind of loan called a Direct Consolidation Loan. You can use this loan to pay off a single or multiple student loans, while enjoying just one convenient monthly payment.

      We welcome your feedback on this article and would love to hear about your experience with the debt consolidation loans we recommend. Contact us at inquiries@thesimpledollar.com with comments or questions.

      Methodology

      SimpleScore

      The SimpleScore is a proprietary scoring metric we use to objectively compare products and services at The Simple Dollar.

      For every review, our editorial team:

      • Identifies five measurable aspects to compare across each brand
      • Determines the rating criteria for each aspect score
      • Averages the five aspect scores to produce a single SimpleScore

      Here’s a breakdown of the five aspect scores and their rating criteria for our review of the best personal loans of 2020.

      Why do some brands have different SimpleScores on different pages?

      To ensure the SimpleScore is as helpful and accurate as possible, we developed unique criteria for every category we compare at The Simple Dollar. Since most brands offer a variety of financial solutions, their products and services will score differently depending on what we’re scoring on a given page.

      However, it’s also possible for the same product from the same brand to have multiple SimpleScores. For instance, if we compare NetCredit’s personal loans according to our criteria for the best personal loans, it scores a 2.3 out of 5. But when we compare NetCredit according to the criteria for the best bad credit personal loans, it scores considerably higher, since the criteria for the latter review are more lenient (lenders who serve borrowers with bad credit will always offer higher rates, so we needed to adjust our category methodology to account for different industry standards).

      Questions about our methodology?

      Email Hayley Armstrong at hayley@thesimpledollar.com.

      Rates

      We looked at the maximum APR for each lender — the lower their maximum rate, the higher their score.

      Loan Size

      We awarded higher scores to lenders with more generous loan sizes.

      Customer Satisfaction

      We leveraged the J.D. Power 2019 Personal Loan Satisfaction Study℠ to see how customers rated their experience with each lender. (If a lender wasn’t included in J.D. Power’s study, we skipped this aspect and averaged the four remaining aspect scores.)

      Support

      We awarded higher scores to lenders with the most channels for customer support.

      Fees

      We looked at the three most common fees — origination, late payment, and pre-payment — and penalized lenders for each fee charged.

      Lena Borrelli

      Contributing Writer

      Lena Borrelli is a Tampa-based freelance writer who has worked with leading industry titans, such as Morgan Stanley, Wells Fargo, and Simon Corporation. Her work has most recently been published on sites like TIME, ADT, Fiscal Tiger, Bankrate and Home Advisor, as well as many other websites and blogs around the world.

      Reviewed by

      • Courtney Mihocik
        Courtney Mihocik

        Courtney Mihocik is an editor at The Simple Dollar who specializes in insurance, personal finance, and loans. Previously, she wrote and edited for Interest.com, PersonalLoans.org, Ballantyne Magazine, Thread Magazine, The Post, ACRN, The New Political, Columbus Alive and the Institute for International Journalism.