Compare Debt Consolidation Loans

Editorial Disclaimer: The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities. Some of the offers below are from our partners.

By clicking “See Offers” you’ll be directed to our parent company, LendingTree. You may or may not be matched with the specific lender you clicked on, but up to five different lenders based on your creditworthiness.

Advertiser Disclosure

Compare Multiple Offers in MinutesLendingTree

Terms of Loan24 to 60 months

APR Range As low as 3.99^%

Credit ScoreMinimum 500 FICO^®minimum credit score

SEE OFFERS

on LendingTree's secure website

Advertiser Disclosure

LendingTree, MagnifyMoney’s parent company, is a loan marketplace that matches consumers looking to consolidate their debt with lenders who have products that fit the borrowers’ needs.... Read More

Pros:

Loans for good and bad credit
Debt consolidation calculator
Soft pull when checking credit rates
No fees for using the LendingTree service

Cons:

Not recommended if your debt is more than 50% of your income
No loans for those outside the U.S.
Can’t change the information on the loan request after it’s submitted

Whether you’d like to consolidate your debt with a personal loan, debt management plan, balance transfer credit card or a home equity line of credit, LendingTree can help. You are never obligated to accept an offer and have the freedom to negotiate directly with the lender.

Advertiser Disclosure :

A Personal Loan can offer funds relatively quickly once you qualify you could have your funds within a few days to a week. A loan can be fixed for a term and rate or variable with fluctuating amount due and rate assessed, be sure to speak with your loan officer about the actual term and rate you may qualify for based on your credit history and ability to repay the loan. A personal loan can assist in paying off high-interest rate balances with one fixed term payment, so it is important that you try to obtain a fixed term and rate if your goal is to reduce your debt. Some lenders may require that you have an account with them already and for a prescribed period of time in order to qualify for better rates on their personal loan products. Lenders may charge an origination fee generally around 1% of the amount sought. Be sure to ask about all fees, costs and terms associated with each loan product. Loan amounts of $1,000 up to $50,000 are available through participating lenders; however, your state, credit history, credit score, personal financial situation, and lender underwriting criteria can impact the amount, fees, terms and rates offered. Ask your loan officer for details.

As of 28-Feb-2019, LendingTree Personal Loan consumers were seeing match rates as low as 3.99% (3.99% APR) on a $10,000 loan amount for a term of three (3) years. Rates and APRs were based on a self-identified credit score of 700 or higher, zero down payment, origination fees of $0 to $100 (depending on loan amount and term selected).

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LightStream

Terms of Loan24 to 144 ^*months

APR Range 3.99^{% *}
To
14.24^%
with AutoPay

Credit Score660minimum credit score

SEE OFFERS

on LendingTree’s secure website

Advertiser Disclosure

LightStream is a division of SunTrust Bank that offers debt consolidation loans between $5,000 and $100,000.... Read More

Pros:

APR as low as 3.99% with autopay
$100 Loan Experience Guarantee
No fees or prepayment penalties
No appraisals or down payments
Rate Beat Program

Cons:

Can’t use the funds to refinance an existing loan with LightStream
Rates without autopay are 0.50% higher
Only for individuals with good credit
Hard pull when checking credit rates

Individuals with either good or excellent credit may find LightStream hard to beat, especially if they are willing to sign up for autopay for an additional discount. Its Rate Beat Program also ensures you get the best rate when applying for a debt consolidation loan.

Read Full Review of LightStream here

Advertiser Disclosure :

Your APR may differ based on loan purpose, amount, term, and your credit profile. Rate is quoted with AutoPay discount, which is only available when you select AutoPay prior to loan funding. Rates under the invoicing option are 0.50% higher. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice. Payment example: Monthly payments for a $10,000 loan at 3.99% APR with a term of 3 years would result in 36 monthly payments of $295.20.

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RocketLoans

Terms of Loan36 or 60 months

APR Range 5.98^%
To
29.99^%

Credit Score640minimum credit score

SEE OFFERS

on LendingTree’s secure website

RocketLoans, a Quicken Loans family company, has personal loans with 36 or 60 month terms that are designed to help you move high interest debt to a lower rate.... Read More

Pros:

No hidden fees or prepayment penalties
Same-day funding
Discount for using autopay
Checking your options doesn’t affect your credit score

Cons:

Origination fee of 1.00% - 6.00%
Maximum 29.99% APR without autopay
$15 late fee each payment cycle if the loan isn’t paid on time
Good credit required

If you need funds fast, RocketLoans’ automated system and quick payout is a good choice. You’ll need to be mindful of the origination fee before accepting the loan.

Read Full Review of RocketLoans here

Peerform

Terms of Loan36 or 60 months

APR Range 5.99^%
To
29.99^%

Credit Score600minimum credit score

SEE OFFERS

on LendingTree’s secure website

Peerform debt consolidation loans are offered by Cross River Bank using a marketplace lending platform.... Read More

Pros:

No hidden fees or prepayment penalties
Good and bad credit accepted
Checking eligibility won’t impact your credit score
Free application with fast decision

Cons:

Origination fee between 1.00% - 5.00%
Consolidation loans are invite-only
Loans not available in Connecticut, Iowa, North Dakota, Vermont, West Virginia or Wyoming

If you’ve had trouble getting a debt consolidation loan elsewhere, Peerform is a good alternative. You won’t need to put up any collateral and you’ll have a fixed monthly payment that is easy to include in your household budget.

Read Full Review of Peerform here

Payoff

Terms of Loan24 to 60 months

APR Range 5.99^%
To
24.99^%

Credit Score640minimum credit score

SEE OFFERS

on LendingTree’s secure website

Advertiser Disclosure

Payoff is dedicated to helping customers reach their financial goals by offering products that focus on personality and financial behavior.... Read More

Pros:

McAfee-certified security technology
Checking your rate won’t hurt your credit score
No application or prepayment fees
No late or returned check fees

Cons:

Origination fee ranges from 0.00% - 5.00%
No short-term loan options

Borrowers looking for a community and not just a bank loan will love Payoff. As a community member, consumers are rewarded with free FICO score updates, job loss support and the proactive support of the Member Experience Team.

Read Full Review of Payoff here

Advertiser Disclosure :

All loans are subject to credit review and approval. Your actual rate depends upon credit score, loan amount, loan term, credit usage and history. Currently loans are not offered in: MA, MS, NE, NV, OH, and WV.

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SoFi

Terms of Loan24 to 84 months

APR Range 5.99^%
To
16.24^%

Credit Score680minimum credit score

SEE OFFERS

on LendingTree’s secure website

Advertiser Disclosure

SoFi passes savings on to its members by being entirely digital, which also means it can review and approve applications at a faster rate.... Read More

Pros:

Checking your rate won’t affect your credit score
No origination, prepayment or hidden fees
Online customer service team available seven days a week
Referral Program for earning extra cash

Cons:

Selective in who it approves for loans
No short-term loans
If you don’t use autopay, you’ll lose a 0.25% discount

SoFi is unique in that it also offers a host of member benefits. Members receive discounts on future loans, unemployment protection, career coaching, guidance from licensed financial advisers and invites to special events.

Read Full Review of SoFi here

Advertiser Disclosure :

Fixed rates from 5.990% APR to 16.240% APR (with AutoPay). Variable rates from 5.72% APR to 14.60% APR (with AutoPay). SoFi rate ranges are current as of February 15, 2019 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. See APR examples and terms. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 5.72% APR assumes current 1-month LIBOR rate of 2.49% plus 4.28% margin minus 0.25% AutoPay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.

To check the rates and terms you qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull.

See Consumer Licenses.

SoFi Personal Loans are not available to residents of MS. Minimum loan requirements might be higher than $5,000 in specific states due to legal requirements. Fixed and variable-rate caps may be lower in some states due to legal requirements and may impact your eligibility to qualify for a SoFi loan.

Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi's underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)

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FreedomPlus

Terms of Loan24 to 60 months

APR Range 5.99^%
To
29.99^%

Credit Score700minimum credit score

SEE OFFERS

on LendingTree’s secure website

Advertiser Disclosure

FreedomPlus offers unsecured personal loans for between $7,500 and $40,000 with terms from 24 to 60 months.... Read More

Pros:

More than your credit report is considered
No hidden fees or prepayment penalties
Fast approval and funding

Cons:

Origination fee between 0.00% - 5.00%
Lowest APR of 5.99% may be hard to be approved for

FreedomPlus is a good option for borrowers who needs funds quickly and may not have the best credit scores. That’s because FreedomPlus considers more than just your credit report. However, those with high credit scores might not find the lender to be a competitive option. To qualify for the lowest rates, you’ll need jump through a few hoops.

Read Full Review of FreedomPlus here

Advertiser Disclosure :

All loans available through FreedomPlus.com are made by Cross River Bank, a New Jersey State Chartered Commercial Bank, Member FDIC, Equal Housing Lender. All loan and rate terms are subject to eligibility restrictions, application review, credit score, loan amount, loan term, lender approval, and credit usage and history. Eligibility for a loan is not guaranteed. Loans are not available to residents of all states – please call a FreedomPlus representative for further details.

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PenFed Credit Union

Terms of Loan60 months

APR Range As low as 6.49^%

Credit Score700minimum credit score

APPLY NOW

on PenFed Credit Union's secure website

Hard credit pull

PenFed Credit Union strives to educate, encourage and assist its members in achieving their financial goals.... Read More

Pros:

Bill consolidation calculator
No origination fee for fixed loans up to $25,000
Fast approval process

Cons:

Must become a member to apply for a loan
All loans come with a minimum $50 monthly payment
Late payment between $5 and $25

To take advantage of PenFed Credit Union’s bill consolidation loan, you’ll need to meet the member eligibility requirements. This could be through your employer, an association membership, a military affiliation or a volunteer position.

Read Full Review of PenFed Credit Union here

LendingClub

Terms of Loan36 or 60 months

APR Range 6.95^%
To
35.89^%

Credit Score600minimum credit score

SEE OFFERS

on LendingTree’s secure websit

LendingClub is another alternative lender that connects borrowers with investors through an online marketplace.... Read More

Pros:

Checking your rate won’t affect your credit score
No prepayment penalties
Resource center with tips for protecting yourself against scams and identity theft

Cons:

Origination fee between 1.00% - 6.00%
$7 processing fee for each monthly payment made by check
Late payment of either $15 or 5 percent of the unpaid balance

While you can get a rate quote within minutes, it will take about a week before you have access to the funds, so you may want to opt for a different lender if you need the money fast. You’ll also want to keep an eye on the rates, which are slightly higher than other financial institutions.

Read Full Review of LendingClub here

Marcus by Goldman Sachs®

Terms of Loan36 to 72 months

APR Range 6.99^%
To
24.99^%

Credit ScoreVariesminimum credit score

SEE OFFERS

on LendingTree’s secure website

Advertiser Disclosure

Consumers can apply for a personal loan of up to $40,000 through Marcus by Goldman Sachs and use those funds to consolidate high-interest debt into one fixed monthly payment.... Read More

Pros:

Can check loan options without affecting your credit score
Personal loan calculator
No fees
On-time payment reward

Cons:

Must have a credit score of 660 or higher
Residents of Maryland are not eligible to apply
Loans can’t be used for education-related expenses

Borrowers with good credit who pay on time are a good fit for a Marcus by Goldman Sachs personal loan. After 12 consecutive on-time payments, customers are rewarded with the ability to defer a future payment.

Advertiser Disclosure :

Your loan terms are not guaranteed and are subject to our verification of your identity and credit information.To obtain a loan, you must submit additional documentation including an application that may affect your credit score. Rates will vary based on many factors, such as your creditworthiness (for example, credit score and credit history) and the length of your loan (for example, rates for 36 month loans are generally lower than rates for 72 month loans).Your maximum loan amount may vary depending on your loan purpose, income and creditworthiness. Your verifiable income must support your ability to repay your loan. Marcus by Goldman Sachs is a brand of Goldman Sachs Bank USA and all loans are issued by Goldman Sachs Bank USA, Salt Lake City Branch. Applications are subject to additional terms and conditions.

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Discover Personal Loans

Terms of Loan36 to 84 months

APR Range 6.99^%
To
24.99^%

Credit Score660minimum credit score

SEE OFFERS

on LendingTree’s secure website

Advertiser Disclosure

Discover has a personal loan for debt consolidation. When applicants select “debt consolidation” as the purpose for the loan, 70% of the approved funds must be paid to creditors.... Read More

Pros:

Funds can be disbursed within 24 hours
No prepayment, origination or application fees
Debt consolidation calculator

Cons:

Funds can’t be used to pay off secured loans
Funds can’t be used to pay for postsecondary education
Late fee of $39

As long as you have a household income of $25,000 or more, are 18 or older and are a U.S. citizen or permanent resident, you can apply for Discover’s personal loan. You’ll still need to meet certain credit requirements, although these minimums are not publicly disclosed.

Read Full Review of Discover Personal Loans here

Advertiser Disclosure :

APRs range from 6.99% to 24.99% APR based on creditworthiness at application. Loans up to $35,000. Fast & Easy Process. Terms are 36 to 84 months. No prepayment penalty. This is not a firm offer of credit. Any results displayed are estimates and we do not guarantee the applicability or accuracy to your specific circumstance. Your APR will be between 6.99% and 24.99% based upon creditworthiness at time of application.

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Santander Bank, N.A

Terms of Loan24 to 60 months

APR Range 6.99^%
To
16.99^%

Credit Score680minimum credit score

SEE OFFERS

on LendingTree’s secure website

Hard credit pull

Santander Bank gives customers the opportunity to apply for a personal loan to consolidate their debt either online or at any one of its 600-plus branches.... Read More

Pros:

Handy debt consolidation calculators
No origination or prepayment fees
Simple 10- to 15-minute application

Cons:

Without ePay, the loan increases by 0.25 percentage points
Good to excellent credit required
Only available in the following states: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont, as well as Washington, D.C.

Consumers who prefer to apply for a loan in-person and who live in one of the approved states or Washington, D.C., would do well to consider Santander Bank for their debt consolidation. The omission of fees and the ePay discount make the loan more affordable.

Read Full Review of Santander Bank, N.A here

First Midwest Bank

Terms of Loan12 to 60 months

APR Range 7.17^%
To
12.87^%

Credit Score680minimum credit score

SEE OFFERS

on LendingTree’s secure website

Hard credit pull

First Midwest Bank is based in Chicago, with 125-plus branches for customers who wish to apply in person for a loan to consolidate their debt.... Read More

Pros:

Free online and branch workshops
Personal Budget Kit
Fraud and security awareness

Cons:

Hard Pull on your credit
Good credit score required
$100 documentation fee

Applicants must live in one of the following 26 states to apply for a loan with First Midwest Bank: Arkansas, Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Massachusetts, Minnesota, Missouri, Nebraska, New Hampshire, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Vermont, Virginia and Wisconsin.

Read Full Review of First Midwest Bank here

Upstart

Terms of Loan36 to 60 months

APR Range 7.46^%
To
35.99^%

Credit Score640minimum credit score

SEE OFFERS

on LendingTree’s secure website

Upstart operates a direct-to-consumer lending platform that provides borrowers with quick decisions and fast funding.... Read More

Pros:

Soft Pull when checking rates
No prepayment penalties
Funding within 24 hours of acceptance
Convenient loan calculator

Cons:

Interest rates are higher than those of other lenders
Origination fee of 0.00% - 8.00% of the target amount
Late fee of $15 or 5 percent of the past-due amount, whichever is greater
$15 returned check fee

Upstart lenders fund the debt consolidation loans except for in the following states: Alaska, Arizona, Hawaii, Maine, Maryland, Massachusetts, Nebraska, New Mexico, North Carolina, North Dakota, Oklahoma and Vermont. Cross River Bank provides loans in these states.

Read Full Review of Upstart here

Upgrade

Terms of Loan36 or 60 months

APR Range 7.99^%
To
35.89^%

Credit Score620minimum credit score

SEE OFFERS

on LendingTree’s secure website

Upgrade uses the latest technology and a digital platform to keep costs lower than traditional banks.... Read More

Pros:

Soft Pull to check your rates
No prepayment fees
Fast funding
Free credit monitoring

Cons:

Origination fee of 1.00% - 6.00%
$10 failed payment charge
Late fee of up to $10

All loans through Upgrade are made through WebBank, which is Federal Deposit Insurance Corp. (FDIC) insured. But before accepting a loan offer to consolidate debt with Upgrade, it is important that consumers factor in the origination fee to determine if the loan will still save you money in the long run.

Read Full Review of Upgrade here

Avant

Terms of Loan24 to 60 months

APR Range 9.95^%
To
35.99^%

Credit ScoreVariesminimum credit score

SEE OFFERS

on LendingTree’s secure website

Avant branded credit products are issued by WebBank, member FDIC.

Avant makes getting a debt consolidation loan easy by using an online platform for the entire process.... Read More

Pros:

Soft Pull when checking rates
No hidden fees or prepayment penalties
Mobile app available on iOS and Android

Cons:

Administration fee of Up to 4.75%
Fees charged for late and dishonored payments
Customers are required to have a checking or savings account on file

Avant branded credit products are issued by WebBank, member FDIC. It is a good choice for consumers who need money fast. But borrowers need to be mindful of the administration fee and high interest rates before signing on the dotted line.

Read Full Review of Avant here

LendingPoint

Terms of Loan24 to 48 months

APR Range 9.99^%
To
35.99^%

Credit Score585minimum credit score

SEE OFFERS

on LendingTree’s secure website

LendingPoint offers loans for debt consolidation in 34 states and Washington, D.C.... Read More

Pros:

Soft Pull when checking rates
All credit types are considered
Quick approval and time to funding
No fees for early payoff

Cons:

Origination Fee Varies
High APRs

Individuals with less-than-perfect credit who have a difficult time getting a loan through a bank will find LendingPoint as a good resource. Of course, borrowers will want to take into consideration the high interest rates and origination fee before making a final decision.

Read Full Review of LendingPoint here

OneMain Financial

Terms of Loan24 to 60 months

APR Range 16.05^%
To
35.99^%

Credit ScoreVariesminimum credit score

SEE OFFERS

on LendingTree’s secure website

Hard credit pull

Advertiser Disclosure

OneMain Financial operates more than 1,600 branches out of 44 states.... Read More

Pros:

Handy personal loan calculator
No prepayment fees
Customer support

Cons:

High APRs
Must visit a branch and meet with a loan specialist
Hard Pull

Due to its high interest rates, OneMain Financial isn’t the best choice for borrowers who have good to excellent credit. Additionally, if you don’t live near one of the company’s branches, getting the loan isn’t convenient.

Read Full Review of OneMain Financial here

Advertiser Disclosure :

Not all applicants will qualify for larger loan amounts or most favorable loan terms. Loan approval and actual loan terms depend on your ability to meet our credit standards (including a responsible credit history, sufficient income after monthly expenses, and availability of collateral). Larger loan amounts require a first lien on a motor vehicle no more than ten years old, that meets our value requirements, titled in your name with valid insurance. Maximum annual percentage rate (APR) is 35.99%, subject to state restrictions. APRs are generally higher on loans not secured by a vehicle. The lowest APR shown represents the 10% of loans with the most favorable APR. Active duty military, their spouse or dependents covered under the Military Lending Act may not pledge any vehicle as collateral for a loan. OneMain loan proceeds cannot be used for postsecondary educational expenses as defined by the CFPB’s Regulation Z, such as college, university or vocational expenses; for any business or commercial purpose; to purchase securities; or for gambling or illegal purposes. Borrowers in these states are subject to these minimum loan sizes: Alabama: $2,100. California: $3,000. Georgia: Unless you are a present customer, $3,100 minimum loan amount. Ohio: $2,000. Virginia: $2,600.

Borrowers (other than present customers) in these states are subject to these maximum unsecured loan sizes: Florida: $8,000. Iowa: $8,500. Maine: $7,000. Mississippi: $7,500. North Carolina: $7,500. New York: $20,000. Texas: $8,000. West Virginia: $7,500. An unsecured loan is a loan which does not require you to provide collateral (such as a motor vehicle) to the lender.

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BestEgg

Terms of Loan36 or 60 months

APR Range Up to 29.99^%

Credit Score660minimum credit score

SEE OFFERS

on LendingTree’s secure website

Advertiser Disclosure

Debt consolidation loans provided by Best Egg are unsecured and made by Cross River Bank. Borrowers can choose between terms of 36 or 60 months with APRs of 5.99%-29.99%.... Read More

Pros:

Soft Pull on your credit score
Receive funds in as little as one day
Multiple payment options
Rates as low as 5.99%

Cons:

No short-term loan options
Origination fee from 0.99% - 5.99%
Need a credit score of at least 660
$15 late fee if not paid within the three-day grace period

Best Egg is worth a look if you need a few years to pay back your debt, but borrowers should be aware that the company may charge a $7 processing fee each month if you decide not to use the automatic payment option.

Read Full Review of BestEgg here

Advertiser Disclosure :

*The Annual Percentage Rate (APR) is the cost of credit as a yearly rate and ranges from 5.99%-29.99%, which may include an origination fee from 0.99% - 5.99%. Any origination fee on a 5-year loan will be at least 4.99% and is deducted from loan proceeds. The APR offered will depend on your credit score, income, debt payment obligations, loan amount, loan term, credit usage history and other factors, and therefore may be higher than our lowest advertised rate. Requests for the highest loan amount may resulting an APR higher than our lowest advertised rate. You need a minimum 700 FICO® score and a minimum individual annual income of $100,000 to qualify for our lowest rate.

Best Egg loans are unsecured personal loans made by Cross River Bank, a New Jersey State Chartered Commercial Bank, Member FDIC. Equal Housing Lender. "Best Egg" is a trademark of Marlette Funding LLC. All uses of "Best Egg" on this site mean and shall refer to "the Best Egg personal loan" and/or "Best Egg on behalf of Cross River Bank, as originator of the Best Egg personal loan," as applicable. Loan amounts generally range from $2,000-$35,000. Offers up to $50,000 may be available for qualified customers who receive offer codes in the mail. The minimum individual annual income needed to qualify for a loan of $50,000 is $130,000. Borrowers may hold no more than two open Best Egg loans at any given time. In order to be eligible for a second Best Egg loan, your existing Best Egg loan must have been open for at least six months. Total existing Best Egg loan balances must not exceed $50,000. All loans in MA must exceed $6,000; in NM, OH must exceed $5,000; in GA must exceed $3,000.

Borrowers should refer to their loan agreement for specific terms and conditions. A loan example: a 5–year $10,000 loan with 9.99% APR has 60 scheduled monthly payments of $201.81, and a 3–year $5,000 loan with 5.99% APR has 36 scheduled monthly payments of $150.57. Your verifiable income must support your ability to repay your loan. Upon loan funding, the timing of available funds may vary depending upon your bank's policies.

To help the government fight the funding of terrorism and money laundering activities, federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. When you open an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you.

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How Debt Consolidation Loans Work

Debt consolidation loans are installment loans you can use to pay off other debt. Some loan products are marketed specifically as “debt consolidation loans.” However, most often debt consolidation loans are simply personal loans with a fixed rate and fixed term.

There are two types of personal loans that can be used for debt consolidation — unsecured personal loans and secured personal loans.

Unsecured personal loans

An unsecured loan is one that you can get approved for without pledging collateral such as a car or home. A lender reviews your credit history and income to determine whether you qualify. Your signature on the loan agreement is enough to secure funds.

Lenders typically verify your income and employment by requesting pay stubs (or bank statements if you’re self-employed) and other documentation. Many alternative lenders, banks and credit unions offer unsecured personal loans online, so you may be able to take care of the entire application process without stepping into a physical location. Funding can happen within a few days.

Unsecured personal loan products are available for borrowers who have good credit and even those who have less-than-stellar credit. As you can see in the loan comparison table above, borrowers with a score in the low 600s may be able to qualify for an unsecured personal loan to consolidate debt but most likely at a higher interest rate.

Secured personal loans

Secured personal loans are backed by something valuable like a car, home or savings. Pledging collateral to back your loan means the lender has the right to take possession of the asset if you don’t repay it. Collateral reduces risk for the lender.

Some banks offer a lower interest rate for personal loans that use your CD or savings account as collateral.

Here’s how it works: During the period of the loan, the lender will block withdrawals from the account you used to back your loan. The downside is that the lender can seize this account should you fail to repay the loan. But successfully repaying the loan may show your lender you’re a reliable customer and have a positive impact on your credit score.

Online lenders

Secured personal loans are less popular in the online lending space. However, these products may be offered to borrowers who aren’t able to qualify for an unsecured loan and therefore tend to have higher interest rates. If your score isn’t great and you can’t qualify for an unsecured product, handing over the title to your car may be the only way to qualify, but be careful.

There are reputable companies like OneMain Financial offering secured loans, and then there are title lenders. Title loan companies offer the short-term secured loans that you may see advertised on storefronts and commercials.

“At OneMain, you may get a 36% interest rate on a $5,000 loan with your car provided as collateral. Title loan companies’ [interest rates] can be in the hundreds of percentage points,” said Nick Clements, co-founder of MagnifyMoney. Clements warns that you could borrow just $1,000 from a title loan company and owe $1,500 within weeks due to triple-digit APRs.

To make matters worse, if you’re unable to pay back the title loan, you can find yourself without a car and in a never-ending cycle of debt. A debt consolidation loan is supposed to be a tool to get you out of debt. It’s not supposed to cause more financial strain. If using your title is your only way to qualify for a loan, make sure it’s an installment loan where you’re using it as collateral to help you qualify and it’s not a payday-structured loan from a title company because of the high fees.

Advantages of a debt consolidation loan

Quick online application. You may be able to qualify for a debt consolidation loan within minutes and have your loan funded within days. Many online lenders also offer a prequalification process where you can shop for rates with a soft pull that won’t harm your credit.
Condenses bills into one easy payment. If you have many payments for credit cards, auto loans, medical bills and more, one payment can be far easier to manage. You can also obtain large loan amounts if you have a substantial sum of debt to consolidate.
Can reduce your interest rate. It’s fairly easy to do a cost comparison with a debt consolidation loan. If your credit card interest rate is 20% and you qualify for a debt consolidation loan at 12%, you’ll know you’re in for some interest savings.
Can lower your monthly bill. Taking out a loan with an extended loan term of five to seven years can lower your monthly payment. A lower monthly payment can give you some wiggle room to put money elsewhere. For instance, building up an emergency savings account with the extra cash you gain each month can help you avoid falling back on credit cards or other forms of debt in the future.
Has a fixed interest rate and installment payments. Having a fixed interest rate and fixed payment schedule means you know how much the loan will cost you in total. There’s also a set payoff schedule that offers some structure if you’re having trouble managing debt. In comparison, credit cards have a variable interest rate, and you can fall into the debt trap of making just minimum payments, which can spiral out of control.

Disadvantages of a debt consolidation loan

The fees. Many debt consolidation loans have no origination or application fees, but some do. The loan origination fee (if there is one) is often around 1 to 8 percent and deducted from the proceeds of the loan before it appears in your account. Make sure you account for the fees when deciding how much to borrow.
The allure of an extended payment. The extended loan payoff schedule can be a blessing and a curse. Drawing out the loan term may offer a lower monthly payment, but it could also mean you’ll be paying off the lingering debt for several years. Consider a shorter-term loan to speed up repayment if your goal is to crush debt fast.
It’s not a lifeline. A debt consolidation loan is probably not going to be the answer to your prayers if you’re experiencing significant financial trouble. You won’t qualify if your credit has already taken a hit because you’re unable to keep up with your current payments. A debt consolidation loan restructures your debt to make it easier to manage. It won’t resolve delinquencies and defaults.
Good credit may not be required, but credit does matter. You may not be able to qualify for a debt consolidation loan with a competitive interest rate if your credit is less than stellar. Ultimately, you want to land an interest rate that’s better than what you currently have to make the most of a debt consolidation loan.

Things to do before applying for a debt consolidation loan

Consider alternatives

A balance transfer credit card. A balance transfer credit card is probably the cheapest way to consolidate your debt if you use it appropriately. A balance transfer card gives you a 0% APR introductory deal for a certain period of time, often 12 to 21 months. You transfer an existing balance onto the card and pay it off while there’s no interest charged.

There are a few drawbacks to the balance transfer card as well.

You generally need decent credit to qualify.
Balance transfer cards may charge a balance transfer fee of 2 to 5 percent.
Standard interest rates will apply to your balance once the introductory period is over.
There are also credit limits.

“If you have a lot of debt, you’re going to find it difficult to see more than $5,000 approved on the balance transfer card,” said Clements.

Lastly, getting a balance transfer card may not be the best idea if you’ve maxed out every other credit card in your wallet. You may get tempted to make the minimum payment instead of crushing debt during the interest-free period.

Home equity line of credit (HELOC) or home equity loan. A home equity line of credit (HELOC) and home equity loan are two other examples of secured debt you could use for a debt consolidation. These products are secured by your home and both involve borrowing from your home’s equity. A HELOC is a credit line that you can use and pay back as needed while a home equity loan works like a typical installment loan.

Benefits of both types are generally lower interest rates than personal loans or credit cards (after the 0% introductory period), but you may have to pay closing costs.

Qualification criteria for a HELOC and home equity loan can be stringent.

You need to pass a credit check.
Lenders will also review your debt-to-income ratio and loan-to-value (LTV) to determine if you qualify.
Watch out for the fine print when using a HELOC. Interest rates are variable and the minimum payment may be interest-only at the beginning. The low monthly payment could prolong your debt plan or tempt you to borrow more. Learn more about HELOCs and home equity loans here.

Cash-out refinance. A cash-out refinance is when you refinance your home loan for more than your existing loan amount so you can take cash from the deal.

Say your home is worth $200,000, your mortgage balance is $100,000, and you’re sitting on $20,000 of credit card debt. You refinance the mortgage for $120,000. You take the extra $20,000 in cash to pay off your credit cards. Your credit card debt is consolidated into your 30-year, fixed-rate mortgage. This is an option to consider if you’re looking for a low payment that can be spread out over a long period of time.

“[Cash-out refinances] are one of the most popular ways to use home equity right now,” said Clements. “The HELOC and home equity loan space is still very restrictive ... they’re not particularly easy to get or the cheapest relative to the cash-out refinance.” Learn more about cash-out refinances here.

Set a budget and make a repayment plan

As mentioned above, a debt consolidation loan isn’t a saving grace. Before getting one, you should create a monthly budget. Tracking your money will help you identify and curb overspending habits so you can avoid accumulating even more debt after the consolidation. You should also come up with a game plan. The game plan will help you choose the right product.

Do you want to pay off debt within one or two years? A balance transfer card or short-term loan may be the right choice. A balance transfer card is likely the cheapest short-term solution because it can give you 0% APR for a limited time.

Do you want to spread out your payments over many years? A long-term debt consolidation loan, home equity loan or cash-out refinance may be the best move. The cash-out refinance may offer you the longest repayment term for the lowest price.

Be careful to read fine print to avoid scams

Always look for fees and pay close attention to how much a debt consolidation loan will cost you over the entire loan term. Look at lender reviews before borrowing to make sure the company is reputable. Predatory lenders often take advantage of people who are desperate. Don’t make any rash decisions. If a product seems too good to be true, it’s probably too good to be true. Review terms carefully and ask questions about costs before borrowing.

Which lender is best for me?

The best way to choose the right lender is to research and shop around before making a choice. Read our reviews below to decide which lender provides the best option for your specific needs!