Best Loans to Consolidate Debt in 2020

Repaying debt can be stressful, and managing multiple monthly payments might not be the best use of your time or money. Consolidating the debt—combining multiple loans into one new loan—can simplify your finances.

Depending on your new loan's terms, you may also be able to save money and decrease your monthly payment amount by lowering your interest rate. The result could be less stress and a shorter runway to your debt-free future.

How Do Debt Consolidation Loans Work?

A debt consolidation loan is similar to other types of loans—you borrow money and repay it over time. The difference is instead of using it to, say, buy a house, you use a debt consolidation loan to pay off other loans or credit card debt.

Some debt consolidation loan lenders make this easier by sending the money directly to your creditors. Others are marketed as debt consolidation loans, but they're like other unsecured personal loans that transfer the money into your bank account. After receiving the loan, it's up to you to follow through and use the funds to pay your other debts.

Another option is to use a secured loan to consolidate debts, such as a home equity loan or cash-out mortgage refinancing. However, using a secured loan to pay off unsecured debt (such as a credit card) can be risky. If you can't afford your secured loan payment, you might lose your collateral—your home in the case of a home equity loan or refinance.

Missing payments on an unsecured loan can lead to fees, hurt your credit and may eventually result in the creditor suing and getting a judgment against you. But you won't be putting your possessions directly at risk. As a result, it may be best to use unsecured personal loans or perhaps a balance transfer credit card to consolidate debt.

Debt Consolidation Pros and Cons

While consolidating your debts can help you manage your money and pay down loans, there are pros and cons to consider:


  • If your new loan has a lower interest rate than your current loans, less interest will accrue each month.
  • Your debt consolidation loan may have a smaller monthly payment than your current combined monthly payments.
  • Consolidating credit card debt with an installment loan could increase your credit scores.
  • Your new loan's repayment term gives you a clear timeline for paying off the debt.


  • You might not qualify for a consolidation loan with a low interest rate.
  • Even if you get a loan with a low interest rate or monthly payment, you could wind up paying more interest overall if it has a long repayment term.
  • Some loans have origination and prepayment fees.
  • If you consolidate credit card debt and continue to use your credit cards without paying the bill in full, you could wind up with more credit card debt and the consolidation loan to repay.

Find the best personal loans in Experian CreditMatch.

What to Look for in a Debt Consolidation Loan

As you compare potential debt consolidation loans, there are a few features you may want to focus on to slim down your list of potential lenders.

  • Loan amount: Do the minimum and maximum loan amounts meet your needs?
  • Repayment terms: Will the minimum and maximum loan repayment terms meet your needs? A longer term will mean lower monthly payments, while a shorter term could mean repaying less overall.
  • Preapproval: Can you get an estimate of your approval, loan amount and rates with a soft credit check—the kind that doesn't impact your credit scores?
  • Origination fee: Do you have to pay a fee when you take out the loan?
  • Prepayment fee: Is there a fee for paying off the loan early?

The interest rate on a debt consolidation loan is also important in determining whether taking the loan and consolidating your debts make sense. Often, lenders advertise a range of potential annual percentage rates (APRs), but your rate will depend on your creditworthiness.

The rate range isn't particularly helpful as you won't know your rate offer until you apply or get preapproved. However, if you have excellent credit, you may want to target lenders that offer the lowest potential rates.

Also, consider whether you want a loan with a fixed or variable rate. Many lenders offer fixed-rate loans, which give you the certainty of the same monthly payment amount for your loan's entire life. Variable rates often start lower than fixed rates, but may rise in the future.

Seven Top Debt Consolidation Loan Providers

You can find debt consolidation loans from banks, credit unions and online lenders. Here are a few of the top choices, and what you'll want to know about each lender. If you want to receive personalized recommendations based on your credit, try the Experian CreditMatchTM tool.


SoFi is an online lender that tends to be a good fit for those with good to excellent credit. It offers fixed-rate loans with high potential loan amounts and few fees.

    • Loan amount: $5,000 to $100,000
  • Repayment terms: 24 to 84 months
  • Preapproval: Yes
  • Origination fee: No
  • Prepayment fee: No


Upstart could be a good fit if you don't have excellent credit and are looking for a fixed-rate debt consolidation loan. The lender considers a range of information, including your education, area of study and job history, when determining your eligibility for a loan and rates.

  • Loan amount: $1,000 to $50,000
  • Repayment terms: 36 or 60 months
  • Preapproval: Yes
  • Origination fee: 0% to 8%
  • Prepayment fee: No


Payoff's fixed-rate loans are intended for consolidating credit card debt and have loan amounts and terms that will generally meet this need. It also lists some specific criteria for getting approved, such as having at least a three-year credit history and a debt-to-income ratio that's 50% or less.

  • Loan amount: $5,000 to $35,000
  • Repayment terms: 24 to 60 months
  • Preapproval: Yes
  • Origination fee: 0% to 5%
  • Prepayment fee: No


You can use a loan from Upgrade to consolidate a wide variety of loans. However, if you want to pay off credit cards, Upgrade gives you the option of making payments directly to the card companies. Any excess loan amount will be sent to your bank account.

  • Loan amount: $1,000 to $50,000
  • Repayment terms: 36 or 60 months
  • Preapproval: Yes
  • Origination fee: 1.5% to 6%
  • Prepayment fee: No

Marcus by Goldman Sachs

Another fixed-rate loan without an origination fee, Marcus by Goldman Sachs also offers a direct payment option that allows you to send the money to up to 10 credit cards in addition to your bank account. Also, you can request a one-month deferral after making 12 consecutive monthly payments.

  • Loan amount: $3,500 to $40,000
  • Repayment terms: 36 to 72 months
  • Preapproval: Yes
  • Origination fee: No
  • Prepayment fee: No

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With LendingClub, you can have the funds from your fixed-rate personal loan sent directly to up to 12 creditors. Although there's an origination fee, it may be worth checking your rate as the soft credit check won't impact your credit.

  • Loan amount: $1,000 to $40,000
  • Repayment terms: 36 to 60 months
  • Preapproval: Yes
  • Origination fee: 1% to 6%
  • Prepayment fee: No

Best Egg

Best Egg offers fixed-rate personal loans and you can check your rates and terms with a preapproval. While there is an origination fee, it may be lower if you choose the three-year term option. The money will be sent to your bank account, often within one day of completing the application and verification process.

  • Loan amount: $2,000 to $35,000
  • Repayment terms: 36 or 60 months
  • Preapproval: Yes
  • Origination fee: 0.99% to 5.99%
  • Prepayment fee: No

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The information provided is for educational purposes only and should not be construed as financial advice. Experian cannot guarantee the accuracy of the results provided. These results, based on the information provided by you, represent an estimate and you should consult your own financial advisor regarding your particular needs.