Finance

Best debt consolidation loans

WSJ | Buy Side · Jul 22, 2026 16:39 · 11 min read

Streamline your debt payments and reduce your interest costs with help from a debt consolidation loan

Key takeaways

A debt consolidation loan replaces multiple balances with a single monthly payment, often at a lower interest rate.
The best candidates for consolidation have fair to good credit and enough income to manage the new payment comfortably.
Consolidation can simplify repayment and reduce interest costs if you avoid taking on new debt.

Debt consolidation loans can make managing debt less overwhelming by rolling multiple balances into a single loan with one monthly payment.

Consolidation can also lower interest costs and create a clearer path out of debt for the right borrower, but it’s not a cure-all. Whether a debt consolidation loan helps or hurts depends on your credit profile, the terms you qualify for and what you do after receiving the funds.

Compare debt consolidation loans from top lenders

The average annual percentage rate (APR) for a three-year personal loan for a borrower with a 720+ credit score is a little higher at 13.44% as of July 21, 2026, according to Buy Side partner Credible, but some borrowers might qualify for lower rates. If you have high-rate loans and credit card debt, comparing debt consolidation loans could save you money.

Buy Side’s best debt consolidation loans are from our top-rated lenders offering amounts of $50,000 or more and repayment terms of at least five years.

More details on the best debt consolidation loans of July 2026

The Federal Reserve benchmark rate remains on hold at the end of the June 2026 meeting, and average personal loan rates—including those for debt consolidation—are slightly higher compared to one week ago. Current concerns point to the possibility that the Fed might decide inflationary pressures could warrant an increase later in the year.

If you’re looking for a longer-term loan, the average rate for five-year personal loans for those with a 720+ credit score is 18.03%.

Best overall: Lightstream

Lightstream offers loans of up to $100,000 and repayment terms as long as 20 years, making it ideal for consolidating a large amount of debt while improving a monthly budget. No origination fees apply, and you might qualify for an autopay discount, reducing the overall cost of your debt consolidation loan.

Best for direct payments to creditors: SoFi

SoFi offers direct deposit and autopay discounts. You might qualify for a 0% origination fee based on your credit score. You can consolidate up to $100,000 in debt with repayment terms as long as seven years, and SoFi can pay your creditors directly.

Best for joint loans: Happen Bank

Happen Bank lets you apply for a joint loan, which can help you secure a lower rate if your co-borrower has a higher credit score. Rates are competitive, and you can avoid an origination fee with good credit. Loans of up to $75,000 and repayment terms as long as seven years are available.

Best for bad credit: Universal Credit

Universal Credit has a maximum loan amount of $50,000, and offers discounts for autopay and direct pay. You can qualify for a repayment term of up to five years with a credit score below 600.

Best credit union for debt consolidation: Navy Federal

Navy Federal offers unsecured loans of up to $50,000 and secured loans of up to $150,000 to members. Rate discounts are available, and repayment terms of up to seven years are possible. You must meet membership requirements, however.

Best for secured loan options: Upgrade

Upgrade provides direct pay to creditors and allows you to secure a loan with a vehicle. You can borrow up to $75,000 with repayment terms as long as seven years. In addition to a direct pay discount, this lender offers an autopay discount that can reduce your overall loan costs.

Best for rate discounts: Achieve

Achieve offers up to $50,000, which can be used for debt consolidation. Terms of up to five years are available, and Achieve offers a variety of rate discounts, including signing up for direct pay to creditors and having retirement assets.

Best for comparing multiple options: Splash

Splash allows you to compare multiple loan offers by filling out one application. Loan amounts of up to $100,000 are available, and many partners offer repayment terms of up to seven years. You might also be eligible for rate discounts, which can help you reduce your overall costs.

What is a debt consolidation loan?

A debt consolidation loan is typically a fixed-rate personal loan used to pay off multiple debts. Instead of juggling several bills, often with high interest rates, you make one monthly payment to a single lender.

Many debt consolidation loans are unsecured, meaning they don’t require collateral. Some borrowers consolidate debt using secured options, such as home equity loans or lines of credit, which usually offer lower rates but carry the risk of losing your home if you miss payments.

How do you qualify for a debt consolidation loan?

Lenders assess several factors to decide whether you qualify for a debt consolidation loan and what interest rate you receive. Together, these criteria help lenders estimate your likelihood of repaying the loan on time.

Credit score and credit history: Your credit score is a strong predictor of your interest rate. Lenders also review your payment history, your account mix and whether you have recent delinquencies or defaults.
Income and employment stability: Lenders want to see consistent income that can cover your new loan payment and other obligations. Stable employment or reliable self-employment can improve your chances of approval and access to better rates.
Debt-to-income (DTI) ratio: Your DTI compares your monthly debt payments to your gross monthly income. A lower ratio signals that you have room in your budget for another loan, while a high DTI might limit approval or result in higher interest rates.
Total amount of debt you want to consolidate: Lenders set minimum and maximum loan amounts and might cap how much debt they’re willing to consolidate. Large balances can be harder to consolidate if your credit or income doesn’t support the loan size.
Payment history on existing accounts: On-time payments demonstrate reliability, while recent missed payments, collections or charge-offs can make lenders more cautious, even if your credit score meets minimum requirements.
Length of credit history: A longer credit history gives lenders more data to evaluate your borrowing behavior over time. Borrowers with thin or newer credit files might qualify, but often at higher rates.

Debt consolidation loan rates by credit score

Interest rates on debt consolidation loans vary widely based on creditworthiness. Rates for those with excellent, good and fair credit are trending slightly higher, while rates have remained largely the same for those with poor credit.

Borrowers with excellent scores might qualify for rates below the lowest average personal loan APRs, while borrowers with poor or fair credit might see rates similar to or higher than those charged by credit cards.

The rate you qualify for depends on personal factors, including where you live, your income and your total debt. Your rate might be higher or lower than the average for your credit score range.

More: Does Debt Consolidation Hurt Your Credit?

Which types of debt can you consolidate?

Debt consolidation loans are most effective for high-interest or hard-to-manage debts. While not every obligation qualifies, many common consumer debts can be rolled into a single loan to simplify repayment and, in some cases, lower total interest costs.

Credit card debt: Credit cards often have high interest rates. A consolidation loan can replace multiple, high variable-rate balances with one fixed payment, potentially reducing interest charges and helping you pay down principal faster.
Medical debt: Medical bills don’t always accrue interest, but juggling multiple providers and payment plans can be stressful. Consolidating medical debt into one loan can streamline payments and create a predictable payoff timeline, especially if bills have been sent to collections.
High-interest personal loan debt: If you have older personal loans with high rates or several small loans with different due dates, consolidation can simplify repayment and reduce interest costs if you qualify for better terms.
Private student loan debt: Some lenders allow consolidation of private student loan debt into a personal loan. This might help borrowers secure a lower rate or switch from variable to fixed interest, but it typically doesn’t apply to federal student loans, which have their own consolidation and repayment programs.
Other unsecured debts: Some consolidation loans can be used for past-due utility bills, collections or other unsecured obligations, depending on the lender's rules. These loans might help bring delinquent accounts current, though approvals and rates depend heavily on credit profile.

Debt consolidation loans generally can’t be used for secured debts, such as mortgages, although exceptions exist. Lenders might also exclude other debt types from consolidation.

Pros and cons of consolidating debt

Pros explained

Simplifies payments: Consolidation replaces several bills with a single monthly payment, which can reduce missed due dates and make budgeting easier, especially if you manage multiple credit cards or loans.
Can reduce interest costs: If you qualify for a lower rate than you currently pay on average across your loans, consolidation can reduce the amount of interest you pay over time, allowing more of each payment to go toward principal.
Provides a fixed repayment timeline: Most debt consolidation loans have set repayment terms, typically ranging from two to seven years. Knowing exactly when your debt will be paid off can provide structure and motivation.
Might improve credit utilization: Paying off revolving balances, such as credit cards, can lower your credit utilization ratio, a key, positive factor in credit scoring models.
Offers predictable monthly payments: Fixed-rate loans don’t fluctuate like variable-rate credit cards, making it easier to plan for the monthly payment.

Cons explained

Requires discipline to avoid new debt: Consolidation doesn’t eliminate the underlying spending habits that led to your debt. If you continue using credit cards after consolidating, you might end up with more debt than before.
Extended repayment can increase the total cost: Some lenders offer repayment terms of up to 20 years. Choosing a longer loan term can lower your monthly payment but might result in more interest over time, even with a lower rate.
Interest rates depend heavily on credit: Borrowers with fair or poor credit might not qualify for lower rates, making consolidation less effective.
Fees can reduce savings: Some lenders have origination fees or other charges that eat into potential interest savings. Factor them into the loan's total cost.
Not all debts are eligible: Many consolidation loans can’t be used for federal student loans, mortgages or certain secured debts, which might limit how much simplification is possible.

Example of when debt consolidation makes sense

If you carry several high-interest credit cards and qualify for a lower-rate personal loan, consolidation can reduce stress and long-term costs.

The example below shows loans with various repayment terms and amounts. By consolidating all debts into a single loan with a lower interest rate, you can save nearly $100 per month in payments and almost $6,000 in total interest.

Estimate your savings with your debt consolidation loan rate

Use the calculator below to estimate how much you might save by consolidating your debt. Comparing your current balances and interest rates with a potential consolidation loan can clarify whether the move makes financial sense.

How to get a debt consolidation loan online

Applying for a debt consolidation loan online is typically faster and more flexible than going through a traditional bank, but the process benefits from preparation. These steps can help you compare offers and avoid costly mistakes.

1. Understand your credit and finances

Check your credit reports and scores to see where you stand. Review your monthly income, expenses and existing debt payments to ensure a new loan fits your budget. Consider not just your situation today but also whether your finances will benefit over the life of the loan.

2. Determine if debt consolidation is right for you

Before applying, compare the interest rates and total costs of your current debts with what you’re likely to qualify for. Consolidation generally makes sense when it lowers interest rates, simplifies payments or both.

3. List your debts and monthly payments

Create a detailed list of balances, interest rates, minimum payments and due dates. This helps you calculate how much you need to borrow and ensures the consolidation loan covers the debts you intend to pay off.

4. Prepare required documentation

Most online lenders request basic documents, such as proof of income, employment information, and identification. Having them ready can expedite approval and reduce back-and-forth with the lender.

5. Prequalify with several lenders

Prequalification lets you see estimated rates and terms without a hard credit inquiry. Comparing multiple offers helps you identify the most competitive APRs, fees and repayment terms.

6. Complete your application

Once you choose a lender, submit a full application. This process usually involves a hard credit check. If you’re approved, funds are often disbursed within a few business days, either to you or directly to your creditors.

Alternatives to debt consolidation loans

Debt consolidation isn’t the only way to manage or reduce debt. Depending on your credit, income and goals, an alternative might be a better fit.

Debt snowball or debt avalanche method: These DIY strategies focus on paying off debts one at a time. The snowball method prioritizes the smallest balances for quick wins, while the avalanche method targets the highest interest rates to minimize total cost.
Nonprofit credit counseling: Credit counselors can help you create a budget and, in some cases, enroll in a debt management plan (DMP). DMPs might lower interest rates on credit cards but typically require you to close your accounts while you repay. When looking for a credit counselor with a debt management plan, start by checking out the National Foundation for Credit Counseling or the Department of Justice’s approved list of credit counselors.
Balance transfer credit cards: A 0% introductory APR card can be an effective short-term solution for high-interest credit card debt if you can pay off the balance before the promotional period ends. Transfer fees and post-promo rates are important considerations.
Home equity loans or lines of credit: Using home equity to consolidate debt might offer lower interest rates, but it converts unsecured debt into secured debt. Falling behind could put your home at risk.
401(k) loans: Borrowing from a retirement account avoids credit checks, but it has risks. Leaving a job can trigger rapid repayment, and borrowed funds miss out on potential investment growth.
Debt settlement programs: Settlement involves negotiating with creditors to accept less than you owe, often after missed payments. While it can reduce balances, it typically harms credit and might result in taxable forgiven debt. Additionally, high fees can erode your potential savings, and entering a program doesn’t prevent creditors from suing you.
Bankruptcy: Experts typically consider this a last resort. However, if you qualify for bankruptcy, you might be able to wipe out your debts or restructure them to a more manageable payment. Your credit score will take a hit, and a bankruptcy appears on your credit report for up to 10 years. If you feel like your only option is to start over, bankruptcy might provide a fresh start, although it can be difficult to qualify to buy a home for two to three years after the bankruptcy.

How Buy Side rates debt consolidation lenders

We analyzed data points from more than 30 lenders, including traditional banks, credit unions and online lenders, and assigned ratings on a scale of 1 to 5 stars. Our pool includes partner lenders, but partners don’t compensate us for ratings or influence the outcome of our ratings.

We chose six factors and weighted them based on our expert assessment of their importance to readers. Lenders with the highest point values were assigned 5 stars, with the lowest-scoring companies receiving 1 star. Buy Side’s best debt consolidation loans are from our top-rated lenders offering amounts of $50,000 or more and repayment terms of at least five years.

Learn more about how Buy Side rates personal loans using data-driven methodologies.