If debt is weighing you down, consolidation can be a smart financial move. Find out if it’s right for you.

Consolidating debt allows you to combine high-interest debts into one single, lower-interest payment - making your debt easier to manage and pay back

For more information on how it works and if it's a good fit for your financial situation, skip ahead to the following topics:

Or, if you think debt consolidation can be a good idea for you but aren't sure where to start the process, we've laid out the best lenders that can help you secure a consolidation loan at favorable rates:

1. LendingTree

Best for: Borrowers with fair credit+ who want to compare offers in one place

  • All Credit Scores
  • Loan Amount: $5,000 to $50,000
  • Loan Term: 3 months - 15 years
  • APR range: 3.99% - 35.99%

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2. LoansUnder36

Best for: Borrowers with poor credit who can't get approved elsewhere

  • All Credit Scores
  • Loan Amount: Up to $500 to $35,000
  • Loan Term: 3 months - 6 years
  • APR range: 5.99% - 35.99%

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3. Credible

Best for: Borrowers with good credit+ who want to compare offers on one place

  • Minimum Credit Score: All credit scores
  • Loan Amount: Up to $5,000 to $100,000
  • Loan Term: 24-84 months
  • APR range: 4.99% - 35.99%

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4. GuidetoLenders

Best for: Borrowers with fair credit who need funds fast

  • All Credit Scores
  • Loan Amount: Up to $1,000 to $40,000
  • Loan Term: 2 months - 15 years
  • APR range: 4.99% - 35.99%

View Rates ➤

How does debt consolidation work?

The most common way to consolidate debt is to secure a personal loan, use the money from the loan to pay off your debt, then pay back the new loan according to the repayment terms.

Applying for a personal loan is an easy process.

In the past year, 34% of Americans have taken out personal loans – that’s roughly 83.5 million people.

As banking practices changed following the financial crisis of 2008, a new generation of online loan marketplaces began popping up - providing an avenue to borrow money when banks and traditional lenders, still hesitant from the crash, turned away qualified borrowers.  

These new lenders have introduced convenience and automation to the lending process – allowing borrowers to apply in minutes, compare rates at a glance and shop around for the best terms.

The marketplaces with the largest lender networks and highest customer satisfaction are LendingTree (fair credit and above) and GuidetoLenders (poor credit).

When is debt consolidation a good idea?

  • The interest rate on your new loan is lower than the rates on your current debts
  • You have an unmanageable amount of debt payments each month
  • You know that you can pay back the new loan

A real world example: Consolidation makes sense, if...

Let’s say you have three credit cards with a combined debt of $10,000, with interest ranging from 15% to 24.99%. Over approximately 4 and a half years, you’ll pay over $4,000 in interest!

Now, let's say you qualify for a personal loan and lower your interest to 10% for a 2-year loan. By the end of this loan term, you'll have paid out $1,075 - and the debt will be fully paid off. That's more than $3,000 that you saved in interest payments.

For many people, consolidation reveals a light at the end of the tunnel.

If you take a loan with a three-year term, you know it will be paid off in three years — assuming you make your payments on time and manage your spending. Conversely, making minimum payments on credit cards could mean months or years before they’re paid off, all while accruing more interest than the initial principal.

Debt consolidation vs. Balance transfer card

Borrowers with good credit may be able to qualify for a balance transfer card; credit card debt (usually up to $15,000) is transferred to a new card with an introductory interest rate that is usually lower than standard credit card rates.

After the introductory period, the rate increases, usually to an amount that’s higher than a personal loan - so if you can pay the debt back before the introductory period ends (usually no more than 21 months) then this would be your best option - if not, start with a personal loan.

Some other advantages of a personal loan:

  1. Fixed payments ensure you’ll pay off debt on a set schedule
  2. Higher borrowing limits (some lenders offer loans of $50,000 or more)
  3. Can improve your credit (if your credit card balances shrink relative to the credit limits)

Using a personal loan to pay off multiple debts is a smart way to get a handle on your finances, but it shouldn’t be the only step you take towards building a stronger financial future. Consider the cash injection as a launch pad to start a savings plan, budget and build up your credit score.

Still not sure which lender is right for you? Take our short quiz to find out.