Debt consolidation loans can be a helpful tool for individuals who are struggling to pay off multiple debts with high interest rates. By consolidating those debts into one loan with a lower interest rate, it can make it easier to manage and pay off debt. Here are six of the best debt consolidation loans of 2023:
1. LightStream: LightStream offers personal loans for debt consolidation with competitive interest rates and flexible repayment terms. Borrowers can receive loans ranging from $5,000 to $100,000, with repayment terms between two and seven years. Additionally, LightStream offers a rate beat program, where they will beat a competitor’s rate by 0.10 percentage points if the borrower meets certain conditions.
2. SoFi: SoFi offers personal loans for debt consolidation with no fees and competitive interest rates. Borrowers can receive loans ranging from $5,000 to $100,000, with repayment terms between two and seven years. SoFi also offers unemployment protection, where borrowers may be able to pause payments on their loan for up to 12 months if they lose their job.
3. Marcus by Goldman Sachs: Marcus offers personal loans for debt consolidation with competitive interest rates and no fees. Borrowers can receive loans ranging from $3,500 to $40,000, with repayment terms between three and six years. Additionally, Marcus offers a direct payment option, where they will pay off creditors on the borrower’s behalf.
4. Discover: Discover offers personal loans for debt consolidation with competitive interest rates and no fees. Borrowers can receive loans ranging from $2,500 to $35,000, with repayment terms between three and seven years. Discover also offers a direct payment option, where they will pay off creditors on the borrower’s behalf.
5. Upgrade: Upgrade offers personal loans for debt consolidation with competitive interest rates and no fees. Borrowers can receive loans ranging from $1,000 to $50,000, with repayment terms between three and five years. Additionally, Upgrade offers a credit health check, where they will provide personalized advice on how to improve credit scores and manage debt.
6. Avant: Avant offers personal loans for debt consolidation with competitive interest rates and no fees. Borrowers can receive loans ranging from $2,000 to $35,000, with repayment terms between two and five years. Additionally, Avant offers a free online tool to check loan options and estimated rates without affecting credit scores.
Best for Excellent Credit: LightStream
LightStream is an excellent option for individuals with excellent credit looking for a debt consolidation loan. The lender offers personal loans with competitive interest rates and flexible repayment terms, with loan amounts ranging from $5,000 to $100,000. LightStream also offers a rate beat program, where they will beat a competitor’s rate by 0.10 percentage points if the borrower meets certain conditions.
Pros:
– Competitive interest rates: LightStream offers some of the most competitive interest rates in the industry for borrowers with excellent credit.
– Flexible repayment terms: Borrowers can choose repayment terms ranging from two to seven years, allowing them to customize their loan to fit their financial situation.
– No fees: LightStream does not charge any fees for their loans, including origination or prepayment fees.
– Fast funding: Borrowers who are approved for a loan can receive funds as soon as the same day.
Cons:
– High credit score requirement: LightStream requires a minimum credit score of 660, which may be difficult for some borrowers to meet.
– Strict underwriting criteria: In addition to a strong credit score, LightStream also considers factors such as income and savings when evaluating loan applications, which may make it difficult for some borrowers to qualify.
– No option for co-signers: LightStream does not allow co-signers on their loans, which may be a disadvantage for borrowers who need a co-signer to qualify for a loan.
– Limited loan purposes: While LightStream offers loans for a variety of purposes, they may not be suitable for borrowers who need to consolidate certain types of debt, such as student loans.
Best for No Fees: SoFi
SoFi is an excellent option for borrowers who are looking for a debt consolidation loan with no fees. The lender offers personal loans with no origination fees, prepayment penalties, or late fees, making it an affordable option for those looking to consolidate their debt.
In addition to no fees, SoFi offers competitive interest rates and flexible repayment terms. Borrowers can choose from repayment terms ranging from two to seven years and loan amounts up to $100,000. SoFi also offers unemployment protection, which allows borrowers to pause their loan payments for up to 12 months if they lose their job.
Pros:
– No fees: SoFi does not charge any origination fees, prepayment penalties, or late fees, making it an affordable option for borrowers.
– Competitive interest rates: SoFi offers competitive interest rates for borrowers with good credit, which can help save money on interest payments over the life of the loan.
– Flexible repayment terms: Borrowers can choose repayment terms ranging from two to seven years, allowing them to customize their loan to fit their financial situation.
– Unemployment protection: SoFi offers unemployment protection, which allows borrowers to pause their loan payments for up to 12 months if they lose their job.
Cons:
– High credit score requirement: SoFi requires a minimum credit score of 680, which may be difficult for some borrowers to meet.
– Limited loan purposes: SoFi only offers personal loans, which may not be suitable for borrowers who need to consolidate certain types of debt, such as student loans.
– Limited customer support hours: SoFi’s customer support hours are limited compared to other lenders, which may be inconvenient for borrowers who need assistance outside of business hours.
– Limited availability: SoFi loans are not available in all states, so borrowers may need to consider other lenders if they live in a state where SoFi does not operate.
Overall, SoFi is a great option for borrowers who are looking for a debt consolidation loan with no fees and competitive interest rates. However, borrowers who have a lower credit score or need a co-signer to qualify may need to consider other lenders.
Best for Small Debt: PenFed
PenFed Credit Union is an excellent option for borrowers who have a small amount of debt to consolidate. The lender offers personal loans with loan amounts as low as $600, which can be helpful for borrowers who only need to consolidate a small amount of debt.
In addition to small loan amounts, PenFed offers competitive interest rates and flexible repayment terms. Borrowers can choose repayment terms ranging from six to 60 months, which allows them to customize their loans to fit their financial situation. PenFed also offers a discount on interest rates for borrowers who sign up for automatic payments.
Pros:
– No origination fees: PenFed Credit Union does not charge any origination fees on personal loans, which can save borrowers money.
– Competitive interest rates: PenFed offers competitive interest rates for borrowers, which can help reduce the overall cost of the loan.
– Flexible repayment terms: Borrowers can choose repayment terms ranging from six to 60 months, which can help them find a repayment term that fits their budget.
– Discount for automatic payments: PenFed offers a discount on interest rates for borrowers who sign up for automatic payments, which can help save money on interest over the life of the loan.
– Membership benefits: In addition to personal loans, PenFed Credit Union offers a range of other financial products and services, including credit cards, mortgages, and auto loans.
Cons:
– Membership requirement: To be eligible for a PenFed personal loan, borrowers must be a member of the credit union, which may not be convenient for everyone.
– Limited availability: PenFed Credit Union only has physical branches in a few states, which may be inconvenient for borrowers who prefer in-person service.
– Limited loan amounts: PenFed’s personal loans start at $600, which may not be enough for borrowers who need to consolidate a larger amount of debt.
– Credit score requirements: PenFed may require a minimum credit score for personal loan approval, which could exclude some borrowers who have poor or fair credit.
– Longer application process: PenFed’s application process may be longer than other lenders, which may not be ideal for borrowers who need to consolidate debt quickly.
Overall, PenFed Credit Union is a good option for borrowers who have a small amount of debt to consolidate and want competitive interest rates and flexible repayment terms. However, borrowers who need to consolidate a larger amount of debt or have poor or fair credit may need to consider other lenders. Additionally, the membership requirement and longer application process may not be suitable for all borrowers.
Best for Comparing Lenders: Fiona
Fiona is an online platform that allows borrowers to compare offers from multiple lenders, making it an excellent option for borrowers who want to shop around for the best debt consolidation loan. The platform works with several reputable lenders, including Prosper, LendingClub, and Best Egg, among others.
To use Fiona, borrowers can simply fill out a short form and receive personalized loan offers from multiple lenders in one place. Borrowers can compare the loan terms, interest rates, and fees of each offer to find the one that best fits their needs. Fiona’s platform is free to use and does not impact the borrower’s credit score.
Pros:
– Convenient platform to compare offers from multiple lenders in one place.
– Offers a range of loan options, including personal loans, home equity loans, and credit card balance transfers.
– Free to use and doesn’t impact the borrower’s credit score.
– Can save borrowers time and effort in the loan shopping process.
– Provides personalized loan offers based on the borrower’s credit profile and financial situation.
Cons:
– Borrowers still need to carefully review the terms and conditions of each offer to ensure it’s the best option for their financial situation.
– Some borrowers may prefer to work directly with a lender rather than using a third-party platform.
– Not all lenders may be available on the platform, limiting the borrower’s options.
– Some borrowers may not qualify for loan offers through the platform based on their credit profile or financial situation.
– Loan terms and interest rates may vary depending on the lender, so borrowers need to be vigilant in comparing offers to find the best option for their needs.
Best for Credit Card Debt: Discover
Pros:
– Discover’s personal loans offer fixed interest rates and fixed repayment terms, which can make budgeting easier for borrowers.
– Borrowers can use the loan funds to consolidate multiple credit card debts into a single payment, potentially saving money on interest and fees.
– There are no origination fees or prepayment penalties associated with Discover’s personal loans.
– The application process is quick and easy, and borrowers can receive their funds as soon as the next business day after approval.
– Discover’s personal loans also come with a variety of borrower protections, including loan forgiveness in the event of the borrower’s death or permanent disability.
Cons:
– Borrowers need to have good to excellent credit to qualify for Discover’s personal loans.
– While Discover doesn’t charge origination fees, it does charge late payment fees and returned payment fees.
– Discover’s personal loans may not be the best option for borrowers who need to consolidate debt with high-interest rates, such as payday loans or other types of high-interest debt.
– Borrowers may not be able to receive the full amount they need to consolidate all of their credit card debt, depending on their creditworthiness and other factors.
– Discover may not be the best option for borrowers who prefer to work with a local or community bank rather than a large national lender.
Best Debt Consolidation Service: Accredited Debt Relief
Accredited Debt Relief is a debt consolidation service that helps consumers with multiple debts, including credit card debts, medical debts, and personal loans, to consolidate their debts into a single monthly payment. Accredited Debt Relief works with a network of debt consolidation lenders to provide consumers with personalized debt consolidation options.
Pros:
– Accredited Debt Relief offers a range of debt consolidation services, including debt management plans, debt settlement, and debt consolidation loans.
– The company provides a free consultation to help consumers determine the best debt consolidation solution for their needs.
– Accredited Debt Relief has an A+ rating from the Better Business Bureau and is accredited by the American Fair Credit Council.
– The company has a team of debt relief specialists who work with consumers to negotiate with creditors on their behalf.
– Accredited Debt Relief offers flexible repayment terms and affordable monthly payments to help consumers manage their debts.
Cons:
– Accredited Debt Relief charges fees for its services, including a consultation fee and a debt relief service fee, which can be a percentage of the total debt amount.
– Debt consolidation services can impact the consumer’s credit score, and it may take time for the score to recover.
– The debt consolidation process can take time, and consumers may still receive calls from creditors during the process.
– Not all consumers may qualify for debt consolidation services, depending on their creditworthiness and the type of debt they have.
– Consumers should carefully review the terms and conditions of any debt consolidation loan or service before signing up.