Managing many debts at once can be confusing and stressful. Debt consolidation is like putting all your debts into one basket. Instead of dealing with many small debts, you deal with just one. A popular way to do this is by using a personal loan. Basically, you get a new loan, use it to pay off all your smaller debts, and then just focus on paying off that one new loan. It can simplify things and save you money if the new loan has a lower interest rate.

Navigating the world of debt consolidation can seem daunting, but having the right information can make a world of difference. In the article below, we've highlighted the best personal loans specifically designed for debt consolidation. Not only that, but we've also included essential insights and considerations to arm you with the knowledge you need. This will help you decide whether consolidating your debt is the right move for you.

Best Debt Consolidation Lenders of 2023

Various lenders have distinguished themselves this year by offering outstanding debt consolidation loan options. These lenders have been recognized for their competitive interest rates, flexible repayment terms, and commendable customer service. Below, we've curated a list of the top performers aimed at helping you simplify your finances and reduce the overall cost of your debt.

Best Debt Consolidation Loans for 2023

Debt consolidation is a way to combine some or all debts into one new credit line. This way, your debts are contained in a single monthly payment instead of multiple bills.

While debt consolidation doesn’t erase your debts, it can help lower your overall interest rate and monthly payment and make it easier to pay off credit cards, medical debt or other unsecured debts. A personal loan is one way of consolidating debts.

MoneyGeek evaluated different lenders using more than 35 individual data points to determine the best personal loan lenders for debt consolidation. Based on our analysis, Lightstream is the top option for borrowers who need a debt consolidation personal loan.

Best Overall: LightStream

  • LightStream

    • 4.49% to 20.49%APR Range
    • $5,000 to $100,000Loan Amount Range
    • 24 to 84 monthsRepayment Terms
    • Same DayTime to Receive Funds


Runner-Up: Upstart

  • Upstart

    • 8.49% to 35.99%APR Range
    • $1,000 to $50,000Loan Amount Range
    • 36 to 60 monthsRepayment Terms
    • Next DayTime to Receive Funds

Best for Good Credit: SoFi

  • SoFi

    • 5.74% to 20.28%APR Range
    • $5,000 to $100,000Loan Amount Range
    • 12 to 60 monthsRepayment Terms
    • Two DaysTime to Receive Funds


Best For Bad Credit: Upgrade

  • Upgrade

    • 11.69% to 35.47%APR Range
    • $1,000 to $50,000Loan Amount Range
    • 36 to 60 monthsRepayment Terms
    • Same DayTime to Receive Funds


Best For Low-Income: LendingClub

  • Lending Club

    • 5.99% to 35.89%APR Range
    • $1,000 to $40,000Loan Amount Range
    • 36 to 60 monthsRepayment Terms
    • Next DayTime to Receive Funds

    Lending Club

Best For Same-Day Funding: Ally

  • Ally

    • 0% to 26.99%APR Range
    • $500 to $65,000Loan Amount Range
    • Not DisclosedRepayment Terms
    • Same DayTime to Receive Funds


Benefits of Debt Consolidation Personal Loans

Juggling multiple debts can be overwhelming. Debt consolidation personal loans provide a means to streamline your financial responsibilities, offering numerous advantages:

Single Monthly Payment: Imagine you're juggling payments for three credit cards, due on the 5th, 15th, and 25th of every month. Now, consider the simplicity of having just one payment due on the 10th of every month. By consolidating, you replace multiple payments with one, minimizing the chances of accidentally missing a date.

Potential for Lower Interest Rates: Let's assume you have a credit card with a 20% interest rate and another with 23%. If you secure a debt consolidation loan with an interest rate of 15%, you could save substantially on interest payments over time. Essentially, you'd be getting a discount on your debt.

Improved Credit Score Over Time: Imagine in the past, with multiple debts, you occasionally missed payments simply because it was too much to track. After consolidating, you're more consistent with only one payment to manage. Over months, this consistency and your decreasing debt balance could give your credit score a noticeable lift.

Simplified Financial Management: Picture your finances as a dashboard. Previously, with several debts, it looked cluttered with various readings to track. Now, with only one debt, everything is clearer. Instead of spending hours reviewing statements from different creditors, you could spend just a few minutes on one, leaving more time for things you love.

Potential Risks of Debt Consolidation Personal Loans

Debt consolidation personal loans can be a lifesaver for many, but like all financial tools, they come with their own set of potential pitfalls. Being aware of these can help you navigate them more efficiently:

Possibility of Higher Interest Rates: Lenders might view you as a riskier borrower if you have a tarnished credit history. As a result, they might offer you higher interest rates. For example, while someone with excellent credit might get an offer at 10%, you might be looking at rates of 20% or higher if you have bad credit.

Risk of Accumulating More Debt: If you use a debt consolidation loan to pay off credit cards but then rack up balances on those cards again, you'll find yourself in deeper financial trouble. Imagine paying off three credit cards only to fill them up again. Now, you'd have those card payments plus the loan payment.

Losing Collateral on Secured Loans: Some debt consolidation loans are secured, requiring an asset (like your home) as collateral. If you default on the loan, you risk losing that asset. For instance, the lender might repossess your vehicle if you took a loan against your car and can't keep up with payments.

Unexpected Fees: Always read the fine print. Some lenders might have origination fees, early repayment charges, or late payment penalties. Let's say you took a $10,000 loan with a 3% origination fee; that's $300.

Types of Debt that Can be Consolidated

Having many kinds of debts can be confusing. Debt consolidation can help by putting them all together, making things simpler. Below is a table that lists common types of debts and some things to consider if you consider consolidating them.

Type of Debt
Notes and Considerations

Credit Card Debts

These often come with high-interest rates. Consolidating can simplify multiple card payments and reduce the total interest paid.

Medical Bills

Unexpected healthcare costs can accumulate quickly. Consolidation can help manage these bills more efficiently and negotiate down the amount.

Other Personal Loans

Whether from unexpected expenses or planned purchases, consolidating multiple personal loans can lead to a single payment with a better interest rate.

Student Loans

Consolidating can simplify repayment, but be cautious: federal student loans offer benefits (like income-driven repayment plans) that could be forfeited.

Payday Loans

These come with extremely high-interest rates. Consolidating them can help escape the payday loan debt cycle and reduce overall interest.

Home Equity Loans

While these have lower interest rates, they're secured by your home. Consolidating could switch to an unsecured loan, reducing the risk to your property.

Auto Loans

If you have multiple vehicle loans or high-interest auto loans, consolidation might help streamline payments and secure better terms.

Retail Store Cards

Store cards often carry high-interest rates. Combining these into a personal loan can make them more manageable and reduce interest.

Factors to Consider Before Choosing a Debt Consolidation Loan

Your Credit Score: Think of your credit score as your financial reputation. A higher score (e.g., above 700) shows lenders you're trustworthy, which could get you better loan offers with lower interest rates. But if your score is lower, you might face higher interest rates or stricter terms.

  • loans icon

    Total Amount of Debt

    Understand how much you owe in total. For example, if you owe $5,000 on one card and $7,000 on another, you're in $12,000 of debt. It's crucial to know this because you'll want a consolidation loan that can cover the entire amount, ensuring all your debts are wrapped into one.

  • discount icon

    Interest Rates on Current Debts

    Keep an eye on the interest rates of all your current debts. Say one of your credit cards charges 22%, and another charges 18%. Ideally, you'd want a consolidation loan lower than your highest current rate to save money in the long run.

  • loanReview icon

    Loan Terms and Conditions

    These are the rules of your loan. They outline how long you'll be paying off the loan and what might happen if you miss a payment. It's vital to understand these terms to ensure there are no surprises down the road.

  • loanPro icon

    Fees and Charges

    Loans can sometimes come with extra costs. For instance, an origination fee is a charge for setting up the loan. Also, some loans have fees if you try to pay them early. It's essential to know about any extra charges because they can add to the overall cost of the loan, making it more expensive than you initially thought.

How to Choose the Best Debt Consolidation Loan For You

Making the right decision about a debt consolidation loan is crucial for your financial health. With various offers, terms, and lenders in the market, it's essential to approach the choice systematically. This step-by-step guide will help you navigate the process and choose the most beneficial loan for your situation:


Compare Interest Rates

Begin your search by checking the interest rates offered by different lenders. For instance, if you have two credit cards, one with a 23% interest rate and another at 19%, and find a consolidation loan at 15%, you'd save on interest. Aim to find a loan rate lower than your current debts.


Examine Loan Term Durations

Loan terms vary among lenders, dictating how long you have to repay. For example, on a $10,000 loan at 15% interest, a 2-year term might mean monthly payments of around $480, but a 5-year term could reduce that to $240. Choose a term that complements your monthly budget. Shorter terms can lead to higher monthly payments but can clear your debt faster.


Calculate Monthly Payment Amounts

Determine the monthly payment amounts. If a loan quotes a $300 monthly payment, but your budget only allows for $250, you should reconsider. Ensure your monthly obligation will maintain your finances.


Research Lender Reputation and Customer Reviews

A lender's track record speaks volumes. Suppose you come across a lender named "QuickLoans" with an appealing rate. However, online reviews reveal frequent complaints about hidden fees. Such insights can help you sidestep pitfalls.


Check Eligibility Requirements

Lenders have distinct criteria, like minimum credit scores. If a lender requires a score of 680 and yours is 670, consider improving your score or seeking a more lenient lender.


Look Out for Additional Fees and Charges

Always inspect the fine print. A lender might advertise a fantastic rate but tack on a 4% origination fee for a $10,000 loan that immediately adds $400 to your debt.


Ask About Flexibility

Life is full of surprises. What if you suddenly can't make a payment on time? It's essential to know if your lender would allow a brief deferment without extra charges, like in Sarah's case.


Seek Expert Advice

Lastly, always appreciate expert input. Imagine being torn between two loan offers. By highlighting nuances you hadn't considered, a financial advisor could save you significant money and stress in the long run.

Alternatives to Debt Consolidation Personal Loans

While debt consolidation personal loans are a popular option for many individuals looking to manage their debts, it's essential to recognize that they're not the only solution available. Other alternatives might be more suitable or appealing depending on your financial situation, goals, and personal preferences. In the list below, we delve into various options to help you make an informed decision.

Balance Transfer Credit Cards: These cards often offer an introductory period (e.g., 12 or 18 months) with low or 0% interest. Transferring your high-interest debt to such a card can save you on interest, but be cautious of rates after the promotional period ends.

Home Equity Loans or Lines of Credit: By borrowing against the equity in your home, you can often secure lower interest rates. However, since your home is collateral, failing to repay can lead to foreclosure.

Debt Settlement or Management Programs: A third party negotiates with your creditors to reduce your debt or change repayment terms. This can reduce your debt load but negatively impact your credit score.

Bankruptcy: This should be considered only when other avenues are exhausted. Bankruptcy can offer a fresh start, but it has significant implications for your credit.

401(k) Loan: Some people opt to borrow from their 401(k) retirement accounts. This can have lower interest rates and no credit checks, but you must be aware of potential penalties, taxes, and the impact on your retirement savings.

Peer-to-Peer (P2P) Lending: Platforms like LendingClub or Prosper allow direct individual lending. While borrowers sometimes get lower rates than traditional loans, credit scores are still a factor.

Credit Counseling: A credit counselor can offer guidance, establish a debt management plan, and negotiate with creditors, providing a structured way to tackle debt.

Personal Savings: Using personal savings to pay down high-interest debt can be smart, but it's crucial to retain an emergency fund and keep all savings.

Negotiate Directly with Creditors: Communicating with your creditors might secure reduced interest rates or better repayment terms, simplifying your debt management without additional loans.

Frequently Asked Questions (FAQs) about Debt Consolidation Loans

Experts Tips About Debt Consolidation Loans

  1. How can people determine if they can benefit from using a personal loan for debt consolidation?
  2. Are there any potential downsides to consolidating debts with a personal loan?
  3. What should consumers look for when comparing different personal loan lenders’ offers?
  4. In what situations might it be better not to pursue an unsecured personal loan for debt consolidation?
Brett Sifling
Brett Sifling

Director of Get Invested at Gerber Kawasaki Wealth & Investment Management

Mark Stohs
Mark Stohs

Emeritus Professor of Finance at California State University, Fullerton

Peter Zaleski
Peter Zaleski

Professor of Economics at Villanova University

Michael Manahan
Michael Manahan

Lecturer – California State University Dominguez Hills; Author and Business Consultant

Jonathan Grannick
Jonathan Grannick

Financial Planner & Founder of Wonder Wealth

Gregory Germain
Gregory Germain

Professor at Syracuse University College of Law

Malcolm Robinson, Ph.D.
Malcolm Robinson, Ph.D.

Professor of Economics at Thomas More University

Sathya Chey Patterson, CFP®, CDFA®, CSRIC®, AIF®, MBA
Sathya Chey Patterson, CFP®, CDFA®, CSRIC®, AIF®, MBA

Managing Partner, Wealth Advisor at Arise Private Wealth

Jeff Campbell
Jeff Campbell

Founder at Middle Class Dad Money

Ravin Walters, CFP® AWMA®
Ravin Walters, CFP® AWMA®

Financial Planner at Transverse Wealth Solution

Debbi King
Debbi King

Certified Financial Education Instructor and Personal Finance Educator

Jeffrey Clark
Jeffrey Clark

Wealth Advisor and Partner at Pine Grove Financial Group

Qian Wang, Ph.D.
Qian Wang, Ph.D.

Associate Professor of Finance, College of Business and Computing at Georgia Southwestern State University

Angelo DeCandia
Angelo DeCandia

Instructor at Touro University

Jason Cherubini
Jason Cherubini

Lecturer, Business Administration

Kenneth Romanowski, MBA, CTFA(Ret.), CFP Board Emeritus® Member
Kenneth Romanowski, MBA, CTFA(Ret.), CFP Board Emeritus® Member

Adjunct Faculty, Rosemont College and Retired Senior Financial Advisor


We reviewed over 30 personal loan lenders using 35+ individual data points across six key categories: loan affordability, accessibility, consumer friendliness, customer service, flexibility and lender transparency.

Within each ranking criteria category, we considered several data points that carry the most weight when choosing a personal loan lender for debt consolidation. These factors include APR ranges, available loan amount, minimum credit score, minimum income amount, application fees and disbursement time.

Here at MoneyGeek, we value you — the consumer — so we also factor in each lender’s customer support, business ratings and additional features that could make your experience easier and more accessible — like prequalification, payment options and mobile apps.

After careful consideration and calculation, our picks are chosen with your best interest in mind. Our personal loan recommendations and expert tips are meant to help you make the best decision when choosing a lender to consolidate your debts and meet your needs.

About Christopher Boston

Christopher Boston headshot

Christopher Boston is a Senior Manager of Content Strategy and SEO at MoneyGeek. For over half a decade, they have crafted hundreds of articles spanning the higher education, mortgage and personal loan industries. Christopher is passionate about using their skills and experience to create quality content that helps people save and spend their earnings efficiently.


The content on this page is accurate as of the posting/last updated date; however, some of the rates mentioned may have changed. We recommend visiting the lender's website for the most up-to-date information available.

Editorial Disclosure: Opinions, reviews, analyses and recommendations are the author’s alone and have not been reviewed, endorsed or approved by any bank, lender or other entity. Learn more about our editorial policies and expert editorial team.