If you have a laundry list of credit cards with high balances, debt consolidation may offer you an opportunity to combine your debts into one simple monthly payment. A debt consolidation loan is a new loan used to pay off old loans, whether they're auto, personal, student, or virtually any other type of loan, including credit card debt. Applying for any new loan impacts your credit, so you should pick the best lenders before you start to minimize the impact on your credit history.
If you pick the right approach to debt consolidation, you can save hundreds or even thousands of dollars in interest while also alleviating the stresses of multiple monthly payments. When choosing the right loan for you, you need to consider interest rates, origination fees, early payoff fees, and minimum credit scores. Follow along to learn more about these factors and find the debt consolidation loan that best meets your financial needs.
The 8 Best Debt Consolidation Loans of 2020
- Marcus by Goldman Sachs: Best Overall
- OneMain Financial: Best for Bad Credit
- Discover Personal Loans: Best for Good Credit
- Best Egg: Best for Low Interest Rates
- Lending Club: Best Marketplace
- FreedomPlus: Best for Borrowers with a High-Credit Co-Signer
- Payoff: Best for a Debt-Free Plan
- SoFi: Best for Educated Borrowers
The personal loan from Marcus by Goldman Sachs is our top choice due to a combination of competitive interest rates and no fees. There are no origination or prepayment fees (those charged by lenders upon entering into a loan agreement), which is common among top lenders. And unlike others, Marcus also doesn't charge late fees—but you should still pay on time. Interest rates range from 6.99% to 28.99% APR (6.99% to 24.99% for NY residents).
The minimum credit score for a new loan is 660 on the FICO 9 and 580 on the VantageScore 3.0 scale, which limits some borrowers with fair or poor credit. If you can get a better interest rate elsewhere, you should consider it. But otherwise, you can’t beat Marcus by Goldman Sachs thanks to its unbeatable fee schedule. You can borrow $3,500 to $40,000 in a loan.
Marcus is a new bank from Wall Street titan Goldman Sachs. Loans take roughly one to four days to fund. The lender is generally well reviewed.
Want to learn more? Check out our full review of Marcus by Goldman Sachs.
OneMain financial has no minimum credit score and accepts some borrowers with poor credit. Origination fees vary by state and interest rates range from 16.05% to 35.99%. While you may pay a higher interest rate at OneMain Financial, if you can’t get approved elsewhere due to past credit mistakes, that may be your only option.
Unlike most lenders on this list, OneMain Financial has physical branches in 44 states. Loans are available from $1,500 to $30,000 with two- to five-year terms. In some cases, you can get funded the same day.
OneMain Financial also offers secured loans, a type of loan where you pledge collateral like a car title to get a lower interest rate. With this type of loan, if you stop paying, you could lose your collateral.
If you have good credit, Discover offers loans of $2,500 to $35,000 with no origination fees and competitive rates. Interest rates run from 6.99% to 24.99% APR depending on your credit. Loan terms vary from three to seven years.
Discover Personal Loans are available for borrowers with 660 credit scores and above. While it can take up to a week to get funded, if you can get a lower interest rate here and no origination fees, it might be the best lender for maximum savings.
If you want more information, you can read through our full review of Discover Bank.
Best Egg offers some of the best interest rates for high credit borrowers, and even for some borrowers with lower credit scores. The company offers fixed APRs ranging from 5.99% to 29.99% based on your credit history.
Best Egg offers three- or five-year loans and works with borrowers whose credit score is 640 or higher. That said, you do have to pay a 0.99% to 5.99% origination fee based on your credit. Loans are available for $2,000 to $35,000. That means the origination fee will run you between $19.80 and $2,096.50 depending on the loan size and your credit history. You can get funded very quickly, in as little as one day, which is a great benefit for someone itching to get their consolidation finished.
With Lending Club, you are not borrowing from a big bank or self-funding lender. Instead, loans go to a marketplace where they are funded in $25 or larger increments until the loan is completely funded. Lending Club is the largest loan marketplace of its kind with $38 billion in loans funded.
Lending Club offers loans from $1,000 to $40,000 with three- or five-year terms. You need a 600 or higher credit score to qualify. Interest rates range from 6.95% to 35.89% APR and origination fees range from 1% to 6% based on your credit.
This lender has generally good ratings from customers. While it had some bad publicity due to actions of its former CEO, the company seems to have turned a corner and now ranks among the top debt consolidation loan options.
If you can’t qualify for a good debt consolidation loan on your own, FreedomPlus gives you the option to bring on a co-signer to get a better interest rate. That means the co-signer is equally liable for your payments, so you likely won’t find someone willing to sign outside of a parent, sibling, spouse, or other close relation.
Borrowers need a 640 or better credit score to qualify for a loan from $7,500 to $40,000. Rates run from 5.99% to 29.99% APR based on your credit with a 0% to 5% origination fee. Loans are available from two- to five-year periods.
Lender Payoff advertises itself as a lender to pay off credit cards, and it even offers borrowers support in putting together a personal debt payoff plan. That could help you consolidate and pay off your debt for good.
Interest rates range from 5.99% to 24.99% APR and origination fees charge from 2% to 5% based on your credit. Origination fees are based on the loan term (longer loans to translate to higher fees). You’ll need a credit score of at least 640 to qualify. Loans are available from $5,000 to $35,000 total with payback periods from two to five years.
SoFi is a non-traditional lender that started with student loans and expanded into other financial services including personal loans for debt consolidation. SoFi takes some non-traditional criteria into account when lending, as well, including your education and career trajectory.
SoFi requires a minimum 680 credit score for loans from $5,000 to $100,000. Interest rates range from 5.99% to 17.67% depending on the loan term and your credit. Loans are available in terms from two to seven years.
SoFi is great because it charges no origination, pre-payment, or late fees. That makes it potentially the lowest cost lender if your credit and income qualify.
Our writers spent 3 hours researching the most popular debt consolidation loans on the market. Before making their final recommendations, they considered 17 different loans and read over 40 user reviews (both positive and negative). All of this research adds up to recommendations you can trust.