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Best Debt Consolidation Loans - 2021 Picks

Debt payments can pile up like clothes in a laundry basket, but unlike dirty shirts and pants, you can’t get rid of them by pressing a few buttons on a machine. Of course, nothing is ever quite as bleak as it may seem, so don’t throw in that freshly washed towel just yet. Instead, take a look at our suggestions for the best debt consolidation loans, choose one, and get your finances back on track.

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Top 3 Debt Consolidation Loans

Top 3 Picks

Marcus by Goldman Sachs

Fixed-rate loans

No fees

On-time payment rewards

Check Rate READ REVIEW

Payoff

Reports payments to credit bureaus

Low debt consolidation loan rates

Soft credit pull prequalification

Check Rate READ REVIEW

Upgrade

Fast funding

Highly-rated mobile app

Co-signed loans

Check Rate READ REVIEW

5 Best Debt Consolidation Loan Companies

1. Marcus by Goldman Sachs

Fixed-rate loans

No fees

On-time payment rewards

Check Rate

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Marcus is an online bank operated by one of the largest investment banking enterprises in the world - Goldman Sachs. Due to its considerable experience and use of modern technology, customers are guaranteed top-notch financial services, including fixed-rate debt consolidation loans with absolutely no hidden fees.

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APR:

6.99% – 19.99%

Minimum credit score requirement:

660

Term:

from 36 to 72 months

Minimum loan amount:

$3,500

Maximum loan amount:

$40,000

BBB rating:

A+

2. Payoff

Reports payments to credit bureaus

Low loan rates

Soft credit pull prequalification

Check Rate

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Payoff offers highly affordable loans through its user-friendly peer-to-peer lending platform. The California-based company reports your payment history to all three primary credit bureaus. So, if you’re diligent about making your monthly credit card consolidation loan payments on time, you’ll almost certainly see a notable credit score improvement.

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APR:

5.99% – 24.99%

Minimum credit score requirement:

640

Term:

from 24 to 60 months

Minimum loan amount:

$5,000

Maximum loan amount:

$40,000

BBB rating:

A+

3. Upgrade

Fast funding

Highly-rated mobile app

Co-signed loans

Check Rate

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Despite being only a few years old, Upgrade has already proven itself as a reliable lender. The company has provided over 10 million people with credit cards and major purchase, home improvement, as well as debt consolidation loans.

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APR:

7.99% – 35.97%

Minimum credit score requirement:

N/A

Term:

36 or 60 months

Minimum loan amount:

$1,000

Maximum loan amount:

$50,000

BBB rating:

A+

4. Avant

Loan refinancing

No prepayment penalties

SCRA benefits

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Avant-branded credit products are issued by WebBank, an FDIC insured, state-chartered industrial bank. This online lender’s main purpose is to assist middle-income consumers with imperfect credit histories. The company also takes special care of active-duty service members. They are entitled to the very best debt consolidation loans that Avant has to offer.

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APR:

9.95% – 35.99%

Minimum credit score requirement:

N/A

Term:

from 24 to 60 months

Minimum loan amount:

$2,000

Maximum loan amount:

$35,000

BBB rating:

A

5. LendingClub

Direct payments to creditors

Easy application process

Automatic payments

Check Rate

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Since its founding in 2007, LendingClub assisted millions of people with acquiring loans. It’s known for its simple and fast application process achieved through the use of innovative and creative solutions. Perhaps the most unique thing about the company is that it’ll send your debt consolidation loan proceeds directly to your creditors.

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APR:

10.68% – 35.89%

Minimum credit score requirement:

N/A

Term:

36 or 60 months

Minimum loan amount:

$1,000

Maximum loan amount:

$40,000

BBB rating:

NR

Our Methodology for Reviewing Debt Consolidation Loans

It seems like a pretty straightforward process, right? You find the loan with the lowest interest rate and apply for it. To a certain extent, this is accurate because the loan rate is one of the key factors that you need to consider.

However, to choose the very best debt consolidation loan, you need to look at a few more details. To spare you the trouble, we’ve done the research for you, and here are the rating criteria we used.

Loan Requirements

Before evaluating APRs, we check the requirements you have to fulfill in order to receive your loan. Firstly, you have to be 18 or older as well as a US resident. If you meet these requirements, the lenders will proceed to look at your credit score, credit history, and debt-to-income ratio.

To get the most budget-friendly debt consolidation loan rates, you’ll usually need a good or excellent credit score. Although scoring scales tend to differ, the majority of lenders consider any number that’s 660 or above to be good.

However, having a score that’s lower than that doesn’t mean that you’ll immediately be disqualified. On our list, you’ll find several lenders and P2P platforms that accept borrowers with fair and even poor scores.

A person’s credit history is another important factor that lenders look at. They need to know that you’ve been financially responsible in the past.

But we’re aware of the fact that slip-ups happen, and as such we make sure that the debt consolidation loan companies we examine aren’t too strict when it comes to the number of negative marks on your credit reports.

Lastly, lenders prefer a debt-to-income ratio below 36%, which is calculated by dividing your monthly debt payments by your gross monthly income.

Not all companies we look at disclose this information on their websites, but some do reveal the annual income they require from their borrowers.

Of course, certain lenders have a few extra conditions that play a part in our evaluation process, but the ones we’ve listed are of the utmost importance to credit consolidation loan providers.

Annual Percentage Rate and Fees

Debt consolidation should make your life easier, not make your financial situation worse. That’s why we focus on finding the lowest APRs on the market.

As opposed to the interest rate, the APR doesn’t just tell you the annual interest charges but also includes the fees and other costs that come with your loan. Since it provides a lot more information, the APR is what we look at while comparing loans.

Note that some lenders charge non-sufficient funds, late payment, and early payment fees, which aren’t reflected in the APR.

Repayment Terms

No one likes owing money, so it’s understandable why the majority of people consider the best debt consolidation loan to be the one with the shortest term length.

Although you should definitely strive towards freeing yourself from debt as soon as possible, you need to take into account the cost of the monthly payments. Not everyone can afford high loan rates for the sake of getting rid of their debt quickly.

Therefore, it’s up to you to carefully examine your budget and pick the option that fits you best. In order to help you with that, our list includes several companies that offer a wide selection of loan terms.

Unique Features

Often, the top-rated debt consolidation companies offer unique benefits to their customers such as same-day funding, discounts, or credit bureau reporting. Even though these aren’t crucial for picking loans, they can be quite helpful when it comes to deciding between two similar lenders.

Customer Satisfaction

The last thing we analyze are the efforts companies exert to maintain good relationships with their customers.

After all, it can be extremely aggravating to have an important question and be forced to wait for hours for someone to answer it or have someone give you incorrect information.

The best debt consolidation companies are usually very attentive to their clients. So, you should expect polite agents, who are well-informed about all loan-related matters with reasonably long working hours.

5 Best Debt Consolidation Loans for 2021:

Goldman Sachs was founded in New York in 1869 by Marcus Goldman, who was later joined by his son-in-law Samuel Sachs. In 2016, the company started offering online banking services under the name Marcus by Goldman Sachs.

Its low interest rate consolidation loans and no-fee policy give it an indisputable edge over its competitors.

Loan Requirements

You should know that to apply for a loan with this company, you need to be 19 in Alabama and 21 in Mississippi and Puerto Rico.

In all other states, applicants have to be at least 18 years old. A minimum credit score of 660 is also necessary, as well as a valid US bank account and Social Security or Individual Tax I.D. Number. You’ll also need a valid email address.

APR, Fees, and Repayment Terms

We can honestly say, without any exaggeration, that Marcus offers the best low interest personal loans for debt consolidation.

One of the reasons for this is because it’s lowest estimated APR is only 6.99%, while the highest one is just 19.99%. Add to that the absence of fees, and we are sold.

With Marcus, ‘no fees’ means exactly that. You won’t have to deal with any sign-up or even late payment or prepayment fees. However, late or missed payments may end up on your credit report as negative marks, and you might have to pay extra interest too.

When it comes to loan terms, you’ll have several options to choose from, which is especially important in this case since Marcus provides large debt consolidation loans – the minimum loan amount being slightly higher than average ($3,500).

Unique Features

Potential Marcus customers have a lot to look forward to such as mobile apps, discounts, rewards, and due date adjustments. We’ll briefly go through them one by one.

Marcus’s mobile app is rated 4.5 on Google Play and 4.9 on the App Store. Both versions are very fast and safe, but some functionalities are only available to iOS phone users.

Due to the Servicemembers Civil Relief Act, members of the armed forces and sometimes their spouses/domestic partners can have their APR reduced to just 4%. You’ll need to contact Marcus to find out if you’re eligible for this extremely cheap debt consolidation discount.

Customers that make on-time monthly payments for a year receive a reward in the form of a payment deferral. During the deferrals, you won’t acquire any additional interest or fees.

Lastly, Marcus allows its clients to change their due date up to three times. Note that you won’t be able to use this feature if you haven’t taken care of your previous debt obligations.

Customer Satisfaction

Marcus’s customer support team is every bit as good as its low rate consolidation loans. The company’s number one ranking in the J.D. Power 2019 Personal Loan Satisfaction Study confirms it.

The agents are available via phone from Monday to Friday between 8 a.m. and 10 p.m. (ET) and on weekends from 9 a.m. to 7 p.m. (ET). But you might not even need to contact them since many tips and answers can be found on Marcus’s extensive Help Center and informative Tools & Resources section.

Reasons to Apply

Due date adjustments

Award-winning customer service

Many educational resources

Payoff was launched 11 years ago and has since excelled in making credit card debt consolidation easy and stress-free.

If you have fair or good credit, which would imply that you’re qualified for a low rate with a lender, Payoff is definitely a good choice for you. Its sole weakness is that you can only use the loans for paying off credit cards.

Loan Requirements

For Payoff to connect you to a lender, your credit score must be at least 640, which is lower than what most companies require. Also, you can’t have any delinquencies on your credit reports, and your debt-to-income ratio must be under 50%.

APR, Fees, and Repayment Terms

Payoff’s credit card consolidation loans are among the most affordable on the market, with an APR that starts at just 5.99% or 6.99% for loans above $15,000, but you’ll have to bear the cost of an origination fee.

The fee ranges between 0% and 5%, which isn’t much, especially when you consider the fact that you’ll only have to pay it once.

You’ll be happy to know that the repayment periods are quite reasonable as well. Payoff offers terms between two and five years.

Unique Features

Not only can you get some of the best debt consolidation loans for fair credit through Payoff, but thanks to its monthly credit reporting, your on-time payments will almost certainly boost your credit score.

The company reports your credit history to all three primary credit bureaus (Experian, Equifax, and Transunion).

Another benefit that Payoff members enjoy is access to scientific personality, stress, and cash flow assessments. Although it’s not quite clear what these entail, a combination of financial services and psychological expertise is definitely enticing.

Those who are considering a low rate debt consolidation loan through Payoff can prequalify for one without worrying about the inquiry negatively impacting their credit score. That’s because Payoff uses soft credit pulls for checking the eligibility of applicants.

Customer Satisfaction

Payoff has a Member Experience Team that provides proactive customer support during the first year of your loan, which means that you should expect a welcome call as well as quarterly check-ins.

If you happen to need their assistance in between these check-ins, you can get in touch with them Monday-Friday from 6 a.m. to 6 p.m. and Saturday–Sunday from 6 a.m. to 3 p.m. (PST). There are three ways to contact this top debt consolidation company: phone, email, and live chat.

Reasons to Apply

No prepayment or late payment fees

Psychology-based advice

Proactive customer support

Upgrade is the newest company on our list. In the three short years that it’s been in business, Upgrade managed to provide its customers with over $3 billion in affordable credit.

The company’s co-founder and CEO, Renaud Laplanche, previously served as the CEO of LendingClub. With such an experienced person at the helm, it’s no surprise that this lending marketplace has become so successful.

Loan Requirements

The minimum requirements that you have to meet in order to acquire Upgrade’s fixed-rate personal loans for debt consolidation are relatively lenient.

You have to be a US citizen, a permanent resident, or have a valid visa that allows you to live in the US. In some states, applicants have to be at least 19 years old, while in others the minimum age requirement is 18.

APR, Fees, and Repayment Terms

Upgrade’s APR ranges between 7.99% and 35.97%, but the lowest loan rates require Autopay and for a part of your loan to be paid off directly.

You won’t be penalized for paying off your debt consolidation personal loan early, but you should be aware of three other fees.

The first one is the 2.9% to 8% origination fee, which compared to Upgrade’s competitors is a bit high. Next up is the failed payment fee of $10 and lastly, the late payment fee of up to $10.

Upgrade offers only two loan term options (three or five years), but it makes up for it with an extremely low minimum loan amount of $1,000 and an unconventionally high maximum loan amount of $50,000.

Unique Features

Fast debt consolidation loans are Upgrade’s specialty. Within a single business day, your loan could be both approved and funded.

The maximum amount of time that you may have to wait is four business days, and that’s only if your bank takes a while to process the transaction.

The company’s new mobile app is available for both Android and iOS devices and is already a hit with users. They seem to appreciate the app’s intuitive and user-friendly interface.

Currently, it doesn’t have too many features, but new ones are being added regularly.

If you have doubts about your credit score and know that a few negative notes on your credit reports might prevent you from getting the best personal loans for debt consolidation, you might want to think about taking advantage of Upgrade’s joint application option.

A co-applicant might help you qualify for more money and better debt consolidation loan rates.

Customer Satisfaction

To contact the customer support representatives, you can either email them at support@upgrade.com or call them at (855) 997-3100. During our tests, they were very courteous and knowledgeable. The many customer reviews we’ve read indicate that our experience wasn’t an exception.

Reasons to Apply

Wide range of loan amounts

No prepayment fee

Lenient loan requirements

Avant is a great Illinois-based debt consolidation loan company. It started out as AvantCredit in 2012, with the goal of assisting middle-income consumers.

The company enjoys a great deal of success by offering small to medium loans to those with less-than-perfect credit histories.

Loan Requirements

According to Avant, most of its customers have a credit score that’s between 600 and 700, but our research revealed that you might be able to qualify with a score as low as 580. Of course, the better your credit score, the lower your APR.

APR, Fees, and Repayment Terms

Avant provides some of the best debt consolidation loans for bad credit thanks to its lenient requirements. However, an APR that starts at 9.95% and goes all the way up to 35.99% is a bit steep for those with a good or excellent credit score.

If you fall under one of those categories, you’ll probably get a better deal with Marcus by Goldman Sachs or Payoff.

The lender is very open about its additional charges, which include the administration, late, and dishonored payment fee. You’ll be charged up to 4.75% for the administration fee, and if your payment is more than 10 days late, you’ll have to pay $25. For any payment that doesn’t go through, you’ll incur a fee of $15.

Avant’s small debt consolidation loans ($2,000 – $35,000) are accompanied by both short and long repayment terms. This allows you to tailor the loan to your specific needs.

Unique Features

The first thing that caught our eye with Avant was the SCRA discount. This allows service members to receive interest rates that don’t exceed 6%, and as an additional perk, they won’t have to bear the cost of any late or non-sufficient funds fees during active service.

We shouldn’t forget to mention Avant’s monthly credit reporting. Most customers start to see changes to their credit score after a few months.

In addition, all Avant customers are able to manage their personal loans for debt consolidation anytime and anywhere by downloading the company’s mobile app. It can be found on both Google Play and App Store.

Customer Satisfaction

If you aren’t able to find what you’re looking for by browsing through Avant’s blog and FAQ page, you can call or email the customer support team from Monday to Friday between 7 a.m. and 10 p.m. and even on weekends from 7 a.m. to 8 p.m (CT).

We’ve seen numerous online reviews that both praise Avant’s loans and frequently commend its knowledgeable support agents.

Reasons to Apply

Small loan amounts

Low credit score requirements

Excellent customer reviews

LendingClub is a well-known name in the financial industry. Since 2007, it has been offering debt consolidation services to many customers with fair credit.

The company mastered the art of quick and painless debt consolidation by providing direct payments to creditors. It’s worth mentioning that even though it gained prominence as a peer-to-peer lending company, as of December 31, 2020, the lender will turn to more conventional forms of online banking.

Loan Requirements

To be eligible for a loan with LendingClub, a customer must meet several standard requirements – be a US citizen/permanent resident or have a long-term visa, be no less than 18 years old, and have a confirmable bank account.

Unfortunately, residents of Iowa and US territories looking for debt consolidation companies aren’t eligible for LendingClub services.

APR, Fees, and Repayment Terms

LendingClub’s APRs range between 10.68% and 35.89%, which is a bit higher than what some of its competitors offer.

If you choose this company to be your lender, you are obliged to pay the origination fee, which ranges between 1% and 6% of the loan amount.

The company deserves praise for its transparency because it clearly outlines the fees that are included in the APR and those that aren’t.

It’s safe to say that if you choose its debt consolidation programs, LendingClub will keep you in the know of what’s going on with your loan at all times.

Although we weren’t able to retrieve this information from LendingClub’s website, we were able to estimate that the minimum credit score that the lender accepts is around 600.

When it comes to the repayment period, LendingClub gives you two options: if you wish to repay the loan sooner, you can do so in three years. If you’d rather take your time, you can choose to repay it within five years.

The ultimate decision on the repayment term depends on whether you choose a small debt consolidation loan or a large one. That said, LendingClub’s minimum loan amount is $1,000, while $40,000 is the maximum.

Unique Features

Should you consider LendingClub, know that you won’t be disregarded for your below-average credit score.

The lender gives you the option of a joint application, which means you can add a co-signer with a better credit score and significantly improve your chances of getting low consolidation loan rates from designated lenders.

Customer Satisfaction

LendingClub has a Resource Center, where you can find the answer to any question you have about its services, along with numerous insights into how you can improve your financial standing.

If you prefer direct input from a customer support representative, you can send them an email or call them from Monday to Friday between 5 a.m. and 5 p.m. (PT) and on Saturday between 8 a.m. and 5 p.m. (PT).

Reasons to Apply

Small loan amounts

Low credit score requirements

Excellent customer reviews

A Guide to Debt Consolidation Loans

Working to get out of debt can cause a lot of stress and anxiety, especially when you’re not sure where to start.

Taking a look at a few debt consolidation options might be a good idea especially if keeping track of several debt obligations is becoming too much for you. Our short guide is here to help you decide if this is the right move for you.

What is debt consolidation?

Let’s begin by clarifying exactly what debt consolidation means. To consolidate debt is to take out a loan that you can use to pay off all of your existing smaller debts.

The point is to have a single monthly payment that you can easily keep track of and to lower the total debt amount.

The best debt consolidation loans should come with a relatively reasonable APR, so that the sum of your previous debts is lower than the overall cost of your new loan. That’s why we recommend that you carefully inspect your finances as well as shop around and not settle for the very first lender that seems decent.

How does debt consolidation work?

When picking out loans intended for debt consolidation, you’ll usually be presented with two types. The first one involves the lender paying your creditors directly, while the second type relies on you using your loan proceeds to take care of your debts yourself.

It’s hard to say which of these two is the best debt consolidation tactic since the final outcome is the same. Although it can be somewhat faster and easier to just let someone else deal with your creditors for a change.

Is debt consolidation a good idea?

Whether debt consolidation is a good idea or not depends solely on your financial situation and the loans for which you are eligible. Those that are able to pay less, in the long run, should definitely consider this option.

If you’re the kind of person that’s diligent about making all of their payments on time, you could benefit from consolidating your debt since some top debt consolidation companies offer credit reporting.

That’s not to say that there aren’t any bad sides to this debt relief method, one of them usually being a longer repayment period. But once you’ve weighed all the pros and the cons, it’s usually the best solution available.

Debt consolidation alternatives

If you’re uncertain about debt consolidation being right for you, there are a few things that you can try instead.

Sometimes we tend to disregard the simplest solutions because they seem far too obvious to actually work. One such option is to create a strict budget and repayment strategy. You’d be surprised how much of a difference a little discipline can make.

Another alternative to getting a loan for debt consolidation is debt settlement, which is essentially attempting to persuade your creditors to accept a single reduced payment and forgive the rest. People usually hire debt settlement companies to do this on their behalf.

The last suggestion we have is for you to consider getting a balance transfer card, ideally, one with 0% APR. These are available through promotional offers.

In order to take full advantage of this card, you need to pay off your entire debt in the time period during which your interest isn’t being compounded.

FAQ

What is the smartest way to consolidate debt?

The smartest way to consolidate debt is to find the best interest rate on a debt consolidation loan that also comes with favorable terms. Alternatively, you could get a balance transfer credit card or try settling your debt.

Do consolidation loans hurt your credit score?

Consolidating your debt can temporarily hurt your credit score. However, a growing number of loan companies are offering bureau reporting, which means that if you keep repaying your loan responsibly, that information becomes part of your credit reports and eventually leads to a credit score boost.

Who offers the best debt consolidation loans?

Marcus by Goldman Sachs offers some of the best debt consolidation loans. Its competitive APR, flexible loan terms, and a wide array of unique features are hard to beat.