5 Best Debt Consolidation Loans of 2021

If you have several high-interest loans, debt consolidation can help you manage your finances by combining multiple debts into a single payment. We researched and selected the five best debt consolidation loans to help you get back on track and adequately manage your monthly bills.

Our Top Picks for Best Debt Consolidation Loans

  • LightStream – Best for Excellent Credit
  • SoFi – Best for Low Interest Rates
  • PenFed – Best for Small Debt
  • Fiona – Best for Bad Credit
  • Discover – Best for Credit Card Debt Consolidation

Best Debt Consolidation Loans Review

  • No fees for loan application, origination or prepayment penalty
  • No appraisals
  • Choose when you want to receive your money
  • Rate discount when you choose autopay
  • Minimum loan amount is $5,000
  • Autopay discount option only available before loan funding
  • Lowest rates require excellent credit

LightStream is our top choice for borrowers with excellent credit who don’t want to pay origination fees or prepayment penalties on their debt consolidation loan. The company offers personal loans up to $100,000 with funding available the same day of approval, and has one of the lowest annual percentage rates (APR), starting at 5.93% with an autopay discount.

LightStream also features a completely online application and a debt consolidation loan calculator with a soft credit check that won’t lower your score. With its Rate Beat Program, LightStream claims it will lower your rate by .10 percentage points if you are approved by a competing lender for an unsecured loan with the same terms.

LightStream holds the #1 spot on J.D. Power’s Consumer Lending Satisfaction Study of 2020.

  • Fixed rates from 4.99%-19.63% with autopay discount
  • No late fees on personal loans
  • Pay lenders directly
  • Funds are not available on the same day of approval
  • Loan terms start at three years up to seven years
  • Minimum loan amount is $5,000

SoFi offers credit card consolidation loans rates starting at 4.99% APR with AutoPay. Most lenders have interest rates up to 35.99%, but SoFi caps their competitive rates at 19.63% APR with AutoPay discount. If the customer declines the AutoPay option, interest rates will be higher.

SoFi’s personal loans have no fees, and customers can make payments and check their loan status on the SoFi mobile app, available for iOS and Android. The company also offers online prequalification with a soft credit pull, fixed rates for the life of the loan, and a fixed payment schedule.

SoFi takes the #4 spot in JD Power’s Consumer Lending Satisfaction Study of 2020.

  • APR starts at 5.99%
  • Apply and check application status online
  • The loan is funded 1-2 business days after approval
  • Loans are up to only $50,000
  • You need to be a member of the credit union to apply

PenFed personal loans start at $600, making it the best lender for someone with debt obligations under $1000. This lender has fixed interest rates, a debt-to-income calculator, and an online application. PenFed also has a mobile application for iOS and Android where members can check their loan status, make loan payments, mobile deposits, and transfer your money between accounts.

To become a member of the PenFed credit union, customers have to open a savings account with a minimum deposit of $5. After approval, the loan is disbursed within 1-2 business days. The APR rate at the time of loan approval is based on creditworthiness, a credit inquiry, and the length of the PenFed membership.

PenFed is not part of J.D. Power’s Consumer Lending Satisfaction Study of 2020; however, it made it to our top list for its low interest rates and no loan fees.

  • Works with any type of credit
  • Online application process
  • Online loan calculator
  • Credit requirements depend on the company selected
  • Some lenders will charge an origination fee of 1-6% of the loan amount

With partnerships with LendingClub, SoFi, Avant, and Marcus by Goldman Sachs, among others, Fiona stands out for providing debt consolidation options for people with any type of credit. Fiona also offers no application fee or prepayment penalty, a complete online application process, and customer service by email or phone.

Fiona loan offers include refinancing for secured and unsecured loans including auto, student loan, and mortgage refinance. The company also provides customers with a reference blog about debt repayment and other financial advice.

Fiona is not part of J.D Power’s Consumer Lending Satisfaction Study; however, some of its partners are on the 2020 list.

  • Several debt consolidation options: balance transfer, personal loans, home equity loans, student consolidation loans
  • Application assistance by loan specialists
  • Discover mobile application
  • Eligibility requirement of a minimum household annual income of $25,000
  • Late payment fee of $39

Discover offers a wide variety of options for debt consolidation. Customers can select a credit card balance transfer with a promotional interest rate, apply for a personal loan, or use their home equity for debt consolidation. Discover doesn’t charge any origination fees, and its personal loan rates are between 6.99%-24.99% APR.

Discover offers customer service 24/7 over the phone and has a mobile app for iOS and Android that allows customers to check their FICO score, access their bank account, make payments, and check balances, among other features.

Discover holds the #3 spot for J.D. Power’s Consumer Lending Satisfaction Study of 2020.

Other lenders we considered

National Debt Relief

  • Negotiate with creditors to settle outstanding debt
  • Online quote
  • Only work with clients that have at least $7,500 in debt
  • A fee of 15-25% of the debt amount

National Debt Relief didn’t make it to our main list because qualifying borrowers need to have at least $7,500 in high-interest debt. Also, they charge a fee of at least 15% of the debt amount. National Debt Relief is not a loan originator but instead a debt management service.

AM One

  • Helps with credit improvement if the loan is denied
  • US-based live support
  • Credit requirements depend on the company selected
  • No information about fees on the website
  • Credit requirements and APR depend on the company selected

There is not enough information about interest rates and loan fees on AM One’s website to include this lender in our top list. With AM One, interest rates and loan fees depend on the lender the borrower is matched with at the time of approval.


  • Funds within 24 hours after approval
  • No prepayment penalty
  • All personal loans have a 2.9% to 8% origination fee
  • The lowest rates require autopay and paying off a portion of existing debt directly

Upgrade didn’t make it into our main list because of its high origination fee and not ranking in J.D. Power’s Consumer Lending Satisfaction Study.

Best Egg

  • Approval in minutes
  • APR from 5.99%-35.99%
  • Below average in J.D. Power’s Consumer Lending Satisfaction Study
  • Origination fee of 0.99-5.99% of the loan amount

Best Egg is not part of our main list because of its high origination fee and below-average ranking in J.D. Power’s Consumer Lending Satisfaction Study.

Lending Club

  • Customized loan options
  • 15-days grace period after the due date to pay without penalties
  • Origination fee of 3-6% of the loan amount
  • Higher APR rates than other lenders, starting at 7.04%

Lending Club, a marketplace for debt consolidation loans, didn’t make it into our top selection because of its origination fee and higher interest rates than other lenders on our list.

OneMain Financial

  • Debt consolidation calculator
  • Loan specialist counseling
  • APR from 18%-35.99%
  • Late payment fees from 1.5-15% of loan payment
  • Origination fees from 1-10% of the loan amount

OneMain Financial is not part of our best personal loan list because of its high APR rates, origination fees, and late payment fees compared to other lenders on our list. Also, this lender scored a below-average rate in JD Power’s Consumer Lending Satisfaction Study.


  • Funded one day after approval
  • No prepayment penalty
  • Administration fee up to 4.75%
  • APR from 9.95%-35.99%

Avant didn’t make it into our top list because of its high interest rate and administration fee. Also, this lender rated below average in J.D. Power’s study about consumer lending satisfaction.

Marcus by Goldman Sachs

  • No fees
  • Loan options within 5 minutes
  • Loan disbursed within five days after approval
  • Rates from 6.99% APR to 19.99%
  • Not suitable for smaller debt

Marcus by Goldman Sachs isn’t on our top list because of their interest rates and longer waiting time for loan disbursement compared to other lenders.


  • Loans from $1,000-$50,000
  • Check loan rate online
  • Only offers three and five years terms
  • FICO or Vantage Score of at least 600

Upstart didn’t make it into our best debt consolidation loans list because of their limited-term offering and below-average score on J.D. Power’s study. Upstart could be a good option for people with fair credit to excellent credit scores.

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Debt Relief won’t fix all your debt problems, but can be a good option for some consumers

If you owe $15,000 or more in debt, Freedom can help you lessen the amount you owe and make managing your debt easier.

Enroll in a Debt Relief Program

Debt Consolidation Loans Guide

In this guide, you can find information about how debt consolidation loans work, step-by-step processes on how to apply, and other alternatives for debt management.

What is a debt consolidation loan?

A debt consolidation loan is an unsecured personal loan that combines several debts into one installment loan payment with a lower interest rate (APR). It’s designed to help borrowers manage credit card debt and unsecured debt with an outstanding balance and high APR rates.

There are different types of debt consolidation options:

  • Personal loan: unsecured loan to pay for existing debt, finance a big purchase, pay medical bills or cover home improvements or renovations
  • Balance transfer: when credit card debt is transferred to another credit card with a lower interest rate
  • Home equity loans and home equity lines of credit: lets the customer borrow money against its home equity. These are only tax-deductible when used for home improvements.

How does debt consolidation work?

Debt consolidation loans gather several debts into a new loan. The borrower uses the loan proceeds to pay other accounts, lowering their credit usage to one single lower monthly payment. Some financial institutions pay the lenders directly instead of depositing the loan money into a bank account.

How to get a debt consolidation loan

  1. Check your credit score. This will help you obtain quotes without incurring multiple hard credit inquiries. Equifax, Experian, and TransUnion are the three main credit bureaus.
  2. Make a list of all your debt and credit utilization.
  3. Check what interest rate you’re currently paying on your credit cards and other outstanding debt.
  4. Research lenders, their interest rates, loan terms and fees.
  5. Use a loan or a debt-to-income ratio calculator to get an idea of the rate you can obtain with your credit score and what payment options are the best for you.
  6. Decide on a lender that offers a lower interest rate — and lower payment — than what you currently have.
  7. If the pre-approved loan has a higher interest rate than what you’re currently paying for in your accounts, ask a co-borrower with good credit to co-sign it.
  8. Apply for a loan.
  9. Analyze your offer and accept it.
  10. Obtain the loan funds and pay your debt.

If your loan application is 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 on your own.

Does debt consolidation affect your credit score?

Yes, debt consolidation can have a negative or positive impact on your credit score. It all depends on the borrower making the right choices when it comes to loan selection. It’s important to know that debt consolidation is not a strategy to increase your credit score; however, it can prove to be beneficial in the long run if the borrowers make on-time payments and don’t incur any new debt.

Alternatives to debt consolidation loans

Instead of applying for a personal loan to consolidate debt, lenders and credit card companies offer other options to their customers.

Home equity loans (HELOCs)

Home equity loans and home equity lines of credit let the customer borrow money against its home equity. Home equity is the difference between the value or amount your home could be sold for and what you owe to the mortgage lender. With a loan, the home equity is disbursed in one payment, with a line of credit you can draw from the funds as needed. HELOCs come as loans or lines of credit. Both are only tax-deductible when used for home improvements.

Balance transfer credit cards

Moving balances from a card with a high APR rate to another credit card with a lower APR rate is an option to consolidate credit card debt. Many credit card companies offer no interest rates on their cards for 12 months, allowing customers to pay or lower their debt during that time.


Bankruptcy is a legal action taken by people or businesses unable to manage outstanding debt. It should be the last resource for dealing with creditors and debt issues. According to The United States Department of Justice, several repayment options are available when filing for bankruptcy.

The most common are:

  • 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, and which federal laws apply to it, you’ll 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 is:

  • Child support
  • Student loans
  • Court fines
  • And most taxes

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.

Try to avoid payday loans, which are loans given at a very high interest rate and have to be completely paid back when the borrower receives their next paycheck.

Debt Consolidation Loans FAQ

How do debt consolidation companies work?

Debt consolidation companies work with people to reduce their monthly debt by consolidating multiple debts into one. Some of these companies charge a fee of the debt amount to help their customers. Besides hiring a debt consolidation company, you can achieve debt consolidation through personal loans, balance credit cards, or home equity loans/lines of credit.

How to get a debt consolidation loan with bad credit?

There are companies, like Fiona, that work with customers with poor credit. For people with a bad or no credit history, APR rates are usually higher than those with excellent credit scores. Another option is to repair your credit and increase your credit score before applying for a personal loan.

Debt consolidation or bankruptcy, which is better?

Bankruptcy should be the last resort to managing your debt. Debt consolidation is a better option than bankruptcy and, with time, can help increase your credit score and improve its history. Bankruptcy stays in your credit report for up to 10 years.

What is the best debt consolidation loan?

In our selection of best debt consolidation loans, we recommend lenders that can help according to the needs of their borrowers. If you’re interested in paying no fees, we recommend LightStream. For lower interest rates, we recommend SoFi, and for bad credit, we recommend Fiona.

Where can I get a debt consolidation loan?

You can apply for a debt consolidation loan online using one of our recommendations, or you can also apply for a loan at banks, credit unions, online marketplaces, or through a debt consolidation agency like National Debt Relief.

How to get approved for a debt consolidation loan?

Before applying for a debt consolidation loan, check your credit score and debt-to-income ratio. Many borrowers require a minimum credit score of around 600 to qualify for a personal loan. You can research lenders, check rates, and apply for those who fit the criteria with that information. If your quotes come back with a high interest rate, consider applying with a co-signer, it can improve your chances of getting a better interest rate and lower monthly payment.

How We Chose the Best Debt Consolidation Loans

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

  • Lenders offering low APR Rates, a variety of loan repayment terms, access to loan specialists, an online application, debt calculator, fast funding, no application fees or a low origination fee
  • J.D. Power Consumer Lending Satisfaction Study: This study measures overall customer satisfaction based on application and approval process, loan management, offerings, and terms and closing
  • Companies with customer service available through phone, chat, or email

Summary of Money’s Best Debt Consolidation Loans of 2021

  • LightStream – Best for Excellent Credit
  • SoFi – Best for Low Interest Rates
  • PenFed – Best for Small Debt
  • Fiona – Best for Bad Credit
  • Discover – Best for Credit Card Debt Consolidation