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The best debt consolidation loans of 2021
| Lender | APR | Amount available | Learn more |
Wells Fargo | 5.74% to 24.24% | $3,000 to $100,000 for unsecured loans, $3,000 to $250,000 for secured loans | |
Lighstream | 5.93% to 19.99% | $5,000 to $100,000 (for excellent credit) | |
SoFi | $5,000 to $100,000 | ||
Payoff by Happy Money | 5.99% to 24.99% | $5,000 to $40,000 | |
Avant | $2,000 to $35,000 for unsecured loans; $5,000 to $25,000 for secured loans |
Generally, you’ll need a personal loan for debt consolidation, which means replacing multiple loans with a single loan instead.
Most personal loan lenders ask about loan purpose when starting the loan application process, and often, personal loans for debt consolidation have higher interest rates than other personal loans and other loan types.
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Wells Fargo
Flexibility makes
Benefits include incredibly competitive interest rates, ranging from 5.74% to 24.24% APR, and an autopay discount of 0.25% if payments are made from a Wells Fargo account. For unsecured personal loans, the most common type for debt consolidation, the amount available ranges from $3,000 to $100,000 and there are no origination or prepayment fees.
Wells Fargo gives several options for personal loans that aren’t common elsewhere. Firstly, there’s an option to secure your loan with a CD or savings account, though that option is only available to current customers. Secured loans allow you to borrow up to $250,000, though an origination fee of $75 applies to secured loans (unsecured loans don’t have a fee).
Wells Fargo can send your loan funds to your Wells Fargo bank account, or to a credit account outside of Wells Fargo to pay down your debts directly.
Watch out for: Secured loan options. Secured loans use collateral to bring down interest rates and increase the amount available to borrow. But using these savings accounts as collateral could mean losing your savings or CD if you don’t pay on your loan.
Additionally, it’s worth mentioning Wells Fargo’s history with data security and compliance. The bank has faced several federal penalties for improper customer referrals to lending and insurance products, and security issues tied to creating fake accounts several years ago.
Read Insider’s full review of Wells Fargo here.
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Lightstream
LightStream offers consistently competitive interest rates, though its minimum interest rate for debt consolidation is higher than its typical personal loan’s interest rates. However, this lender does not have any prepayment or origination fees. Same-day funding is available with LightStream.
Watch out for: Varying loan terms between LightStream’s typical personal loans and debt consolidation loans. Only borrowers with excellent credit can borrow the $100,000 maximum, and anyone without excellent credit may not qualify for the full amount.
LightStream defines excellent credit history as an account with five or more years of credit history, stable and sufficient income for debts, and a variety of credit history with little or no credit card debt. If you’re looking for a debt consolidation loan, chances are you have a significant amount of debt, and may not fit these qualifications.
Additionally, LightStream doesn’t have a way to pre-qualify online. You’ll have to apply for the loan to find out exactly what your rates and terms could look like, which could make comparison shopping difficult.
Read Insider’s full review of Lightstream here.
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SoFi
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SoFi offers unique features like unemployment protection, which could put loans in forbearance for up to three months if you find yourself out of work.
Watch out for: Stringent requirements. SoFi personal loans have a minimum credit score of 680. According to NerdWallet, the average income among borrowers is over $100,000.
Read Insider’s full review of SoFi here.
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Payoff
In the fair credit range, it can be tough to qualify for a personal loan with reasonable interest rates – many lenders have a minimum of 660 or 680. However, a
Compared with competitors Prosper and Best Egg, which both have the same 640 minimum credit score requirement, Payoff’s interest rates are capped lower, and could have lower origination fees.
Watch out for: Origination fees. Payoff offers loans with origination fees ranging from 0% to 5%. Competing lenders Prosper and Best Egg charge minimum 2.41% and 0.99% origination fees, respectively. The better deal will depend on your credit score, income, and repayment term.
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Avant
With bad credit, a personal loan for debt consolidation can be expensive, or hard to qualify for. An
Compared to other personal loan lenders offering debt consolidation loans for bad credit borrowers, Avant’s terms are the most generous. Interest rates range
Watch out for: Secured loan options. Like Wells Fargo, Avant offers the option to secure your loan with collateral like your car. While this could be helpful to lower interest rates, it could put your car in jeopardy if you don’t pay. Secured loans have an administration fee of 2.5%, and a maximum amount of $25,000.
Read Insider’s full review of Avant here.
Other personal loans we considered
- LendingClub personal loans: This lender has the potential for high origination fees that could add to the cost of borrowing. The average origination fee is 5.2%. Read Insider’s full review here.
- Prosper personal loans: Prosper’s minimum credit score requirement is 640, but borrowers with this score could get lower interest rates and potentially lower fees from Payoff. Read Insider’s full review here.
- Best Egg personal loans: Like Prosper, borrowers with credit scores of 640 or above could get lower minimum interest rates and lower maximum fees from Payoff. In order to qualify for the lowest possible interest rates, borrowers need a minimum FICO score of 700 and an income of at least $100,000 per year. Only three-year and five-year loan terms are available, making these loans less flexible than other options. Read Insider’s full review here.
- Discover personal loans: Discover’s personal loan rates start higher than other lenders’ loans, and borrowers who meet the minimum credit score requirements could get lower interest rates from LightStream, which cap lower. However, Discover makes payments directly to creditors, which could simplify your payoff process. Wells Fargo is the only other bank on our listing to offer that option.
- Marcus by Goldman Sachs personal loans: Like Discover, borrowers who qualify for Marcus personal loans could find lower minimum interest rates with LightStream, SoFi, or Wells Fargo.
- Axos personal loans: This lender’s personal loans require a minimum credit score of 720. For borrowers with this type of credit, lower interest rates can be found elsewhere.
- OneMain Financial personal loans: OneMain doesn’t have a minimum credit score required to apply, which could make it a viable option for people who don’t meet Avant’s 600 minimum. But interest rates range from a high
18.00% – 35.99% . Read Insider’s full review here.
Which lender is the most trustworthy?
We’ve compared each institution’s Better Business Bureau score to give you another piece of information to choose your lender. The BBB measures businesses’ trustworthiness based on factors like their responsiveness to customer complaints, honesty in advertising, and transparency about business practices. Here is each company’s score:
| Lender | BBB Grade |
Wells Fargo | NR |
Lighstream | A+ |
SoFi | A+ |
Payoff by Happy Money | A+ |
Avant | A |
With the exception of Wells Fargo, our top picks are rated A or higher by the BBB. Keep in mind that a high BBB score does not guarantee a positive relationship with a lender, and that you should continue to do research and talk to others who have used the company to get the most complete information possible.
The BBB currently does not have a rating for Wells Fargo as the BBB is investigating its profile. Previously, the organization gave Wells Fargo an F in trustworthiness. In the past few years:
- Wells Fargo’s employees created fake bank accounts to meet sales goals, which became public knowledge in 2016, and the company has continued to pay billions in settlements.
- The bank paid the city of Philadelphia $10 million as a result of the city’s claims that Wells Fargo was involved in predatory mortgage lending to racial minorities (2019).
- The Consumer Financial Protection Bureau and Office of the Comptroller of the Currency charged Wells Fargo $1 billion for overcharging and selling extra products to consumers with auto and home loans (2018).
If you’re uncomfortable with this history, you may want to use one of the other personal loan lenders on our list.
Frequently asked questions
Why trust our recommendations?
Personal Finance Insider’s mission is to help smart people make the best decisions with their money. We understand that “best” is often subjective, so in addition to highlighting the clear benefits of a financial product, we outline the limitations, too. We spent hours comparing and contrasting the features and fine print of various products so you don’t have to.
How did we choose the best debt consolidation loans?
To find the best personal loans for debt consolidation, we combed through the fine print and terms of about a dozen personal loans to find the ones that were best suited to help with consolidating debt. We considered four main features:
- APR range: For the most help with debt payoff, a personal loan for debt consolidation needs to have lower interest rates than the credit card or other debts you’re consolidating. We looked for the loans that had the lowest rates possible for each credit range and purpose. The average credit card interest rate was 16.28% in 2020, so we focused on loans that had the potential to beat this.
- Appropriate loan amounts: We looked for personal loans that had the most variety in loan amounts. According to loan comparison site Credible, the median amount of debt consolidated in May 2020 was $18,000. To benefit the most borrowers, we included personal loans with maximum limits over $10,000.
- Minimum credit score requirements: Where available, we considered the minimum credit score requirements for each company. We considered loans for excellent, fair, and poor credit, grouping loans into categories based on these credit score requirements.
- Fees: We considered fees like origination or administrative fees in our decisions, looking for loans with the fewest or lowest fees. None of the best loans listed have prepayment penalties.
- Nationwide availability: We only considered loans with availability in most or all 50 US states.
What is debt consolidation?
Debt consolidation takes all sorts of debts, including credit cards, medical debt, or typically any other type of unsecured debt, and rolls it into one loan.
To consolidate debt, you get a loan from one lender for the total amount of debt you’d like to combine. Then, you use those funds to pay off the individual, smaller debts. At the end, you have all of your debt rolled into one monthly payment, one deadline for debt repayment, and a smaller interest rate.
Can I use any personal loan for debt consolidation?
Most personal loans allow a variety of uses, and while most include credit card consolidation or debt consolidation, not all do. Make sure to read the fine print of any personal loan you’re applying for, and make sure that debt consolidation is an acceptable use of your loan. All of the loans we considered had an option to use the loan for debt consolidation, if not a separate loan, which we included details for.