Best debt consolidation loans for 2022.

A debt consolidation loan helps you combine multiple high-interest accounts into one low payment. These are the best loans to help you save money. (iStock)

If your wallet is full of credit cards and you’re struggling to make your monthly payments, you might want to consider a debt consolidation loan to get your finances on track. A debt consolidation loan allows you to replace multiple debts with a single loan that pays off with fixed interest rates and predictable payments.

Keep reading to learn about some of the best debt consolidation loans on the market and see answers to frequently asked questions about debt consolidation.

If you’re looking for a debt consolidation loan, Credible lets you compare personal loan rates from different lenders all in one place.

What is a summary loan?

A debt consolidation loan is a type of personal loan that can be used to pay off existing debt. These loans are usually unsecured. This means that no assets need to be set up as collateral. Debt consolidation loans also typically have fixed interest rates, payments that remain the same for the life of the loan, and set terms as well. This means you will know exactly when your loan will be paid off.

best debt consolidation loans

The best debt consolidation loans offer low interest rates, low or no fees, and loan amounts that pay off all your existing debt. The following six lenders are reliable partners who are good options for you.

Best Overall: Marcus by Goldman Sachs

Marcus pays his creditors directly and, after making 12 months of timely and full payments, can defer payments for one month without accruing interest. However, if you have a lot of credit card debt, you may need a higher loan limit.

• Minimum credit score: 660
• Loan Amount: $3,500 – $40,000
• Loan term (years): 3-6
• price: none

Best for bad credit: Avant

Avant allows you to deposit loan funds immediately after approval. However, you may be able to find lenders that offer longer loan terms.

• Minimum credit score: 550
• Loan Amount: $2,000 to $35,000
• Loan term (years): 2 to 5
• price: Origination fee up to 4.75%

Great for personal coaching: Happy Money (previously known as Payoff)

Formerly known as Payoff Personal Loans, Happy Money is specifically designed to consolidate your credit card debt. Happy Money (previously known as Payoff) representatives schedule quarterly calls to help you meet your financial goals and also help assess your cash flow and monitor your credit score. But lenders don’t pay your creditors directly.

• Minimum credit score: 600
• Loan Amount: $5,000 to $40,000
• Loan term (years): 2 to 5
• price: Up to 5% origination fee

Best for paying off credit card debt: an upgrade

Upgrades pay creditors directly and can fund personal loans the next business day.

• Minimum credit score: 560
• Loan Amount: $1,000 to $50,000
• Loan term (years): 2 to 6
• price: Up to 8% origination fee

Best for low prices: SoFi

If you lose your job, SoFi may offer to modify your loan payments to prevent default. Also, the company can help you find a new job. But SoFi loans can be difficult to qualify for. Credit score requirements aren’t disclosed, but the lender says on his website that a low credit score may disqualify you for a personal loan.

• Minimum credit score: do not disclose
• Loan Amount: $5,000 to $100,000
• Loan term (years): 2 to 7
• price: none

Best for Low Price: LightStream

LightStream’s advertised interest rates are among the lowest in the market and you may be able to receive your loan funds immediately the same business day you apply. However, lenders do not offer the ability to prequalify.

• Minimum credit score: 660
• Loan Amount: $5,000 to $100,000
• Loan term (years): 2 to 7
• price: none

Credible lets you see interest rates for pre-qualified personal loans, but it doesn’t affect your credit score.

Other lenders to consider

The following three lenders are not Credible partners, so rates cannot be easily compared on the Credible platform. But if you’re looking for a debt consolidation loan, it might be worth considering.

Seriously

A serious partner with a lending platform called Fiona brings personal loan offers from various financial institutions and lenders. However, matching loan terms through Earnest and Fiona does not guarantee that the loan will be approved.

• Minimum credit score: Indefinite
• Loan Amount: $1,000 to $250,000
• Loan terms: 6 months to 12 years
• price: Varies by lender

Laurel Road

If your credit alone isn’t enough to qualify for a debt consolidation loan, Laurel Road can add a high-credit co-guarantor. However, even a creditworthy applicant may pay her APR higher than other lenders charge.

• Minimum credit score: 660
• Loan Amount: $5,000 to $45,000
• Loan term (years): 3-5
• price: none

PNC Bank

Besides traditional installment loans, PNC also offers personal lines of credit. However, if you have a lot of debt that you want to consolidate, PNC will not give you a large loan.

• Minimum credit score: do not disclose
• Loan Amount: $1,000 to $35,000
• Loan terms: 6 months to 5 years
• price: No application, origination, or prepayment penalties

methodology

To identify the best debt consolidation personal loan lenders, Credible evaluated data points including minimum APR, fees, loan terms, speed of loan funding, and other factors. Credible receives compensation from partner lenders, but all opinions expressed are our own and articles are reported objectively.

Why use a debt consolidation loan?

People typically use debt consolidation loans to replace multiple high-interest accounts, such as credit card balances, with one lower, fixed-rate loan. This can often reduce the total amount spent on debt payments and also provides a specific end date by which the debt will be paid off. You could save thousands of dollars in interest and pay off your debt faster than you would have otherwise.

For example, say you have $10,000 in credit card debt with an APR of 29%. Credit card companies typically require a minimum payment of 2% to 4% of the balance. If you have $10,000 in debt, your minimum payment could be between $200 and $400 per month.

If you make a minimum payment of $250, it will take you about 12 years to pay off the entire debt and you will pay over $25,000 in interest. You may also pay more if your APR increases or new charges occur.

A debt consolidation loan can make paying off this debt cheaper and easier. A $10,000 personal loan for five years at a 13% interest rate (average interest rate for the week of March 21, 2022) would pay you approximately $228 per month. But with only $3,652 in interest, the loan he can pay off in five years.

After consolidating your debt, you only need to track one loan, not multiple loans and credit cards, each with a minimum payment and due date.

How do I apply for a debt consolidation loan?

Many debt consolidation loans are available entirely online, making it quick and easy to apply for a loan. Here are the steps to take:

Step 1: Evaluate Your Debt

Before you look for a debt consolidation loan, make a list of all the accounts you want to consolidate, including company name and current balance. You can also write down each due date so that you don’t miss any payments while applying for a consolidation loan. Once you have your list, you can add up all your current balances and determine the size of loan you need to consolidate them all.

Step 2: Check your credit

Your credit score will be an important factor in whether you qualify for a debt consolidation loan and the interest rates and fees you will have to pay. Visit AnnualCreditReport.com to request free credit report copies from three national credit bureaus: Equifax, Experian and TransUnion. Carefully review your report for any errors that may be lowering your score. If you see incorrect information, such as an account listed as overdue but actually up-to-date, you can dispute it with a credit bureau and have it corrected.

Step 3: Compare Shop

Know your credit score and loan amount needed to compare offers from 3-5 personal loan lenders. Look for lenders that offer the lowest interest rates, low or no fees, and loan terms that fit your budget.

Use Credible to compare interest rates on personal loans from different lenders in minutes.

Step 4: Pre-screening

Identify the top 2 or 3 lenders that you think are a good fit for your situation, visit their websites and pre-screen your loan. This usually only requires you to provide your social security number so the lender can run a credit check. This is usually only a soft pull and will not affect your credit score. Your lender may be able to pre-qualify you for certain loan amounts and interest rates.

Step 5: Completing the Complete Application

Choose the best offers from prequalified companies and follow the lender’s instructions to complete a complete loan application. You may need to provide details about your finances for the company’s underwriters. At this point, the lender usually conducts rigorous scrutiny of your credit. Credit bureaus take into account how often you apply for new credit, which may temporarily result in a lower credit score.

Step 6: Receive Loan Funds and Pay Off Debt

Funds for personal loans are usually deposited directly into your bank account, minus any origination fees that must be paid. Lenders may require you to provide bank account information to do so. You can use that money to pay off credit cards and other debt balances. Some debt consolidation lenders offer to make these payments. Continue to pay your credit card or other bills until you receive confirmation that your account is satisfactory.

Debt Consolidation Loan FAQ

What is the appropriate APR for a debt consolidation loan?

Interest rates on personal loans fluctuate over time, but have recently approached historic lows. His 3-year personal loan average APR for the week of March 21, 2022 was 10.43%. The five-year personal loan interest rate was 13%.

Higher credit quality can result in significantly lower interest rates. The APR offered on a debt consolidation loan depends on your credit score and other financial information. The higher your credit score, the lower the interest you usually pay.

How long does it take to get approved for a debt consolidation loan?

Many personal loan lenders can get pre-approved in just a few minutes after completing an online form. Full approval of the loan takes a little longer, usually he takes 1-7 business days. However, you may be able to make a credit decision that day and find a lender who can fund your loan.

Can I get a debt consolidation loan with a low credit score?

yes. However, your options may be limited. Most personal loan lenders have a minimum credit score required to qualify for a debt consolidation loan.

Fewer lenders offer loans to people with moderate or poor credit, which can leave them with fewer options when purchasing a loan. They tend to face high fees.

It may be worthwhile to focus on improving your credit score before applying for a debt consolidation loan. The best way to improve your score is to pay all your bills on time.