Compare the Best Debt Consolidation Loan Lenders
The Best Lenders for Debt Consolidation Loans
We at the MarketWatch Guides team compared dozens of lenders to come up with our top eight picks. If you’re searching for the best debt consolidation loan, here’s where to start.
- LightStream: Our top pick
- SoFi: Best customer service
- PenFed: Best for small loans
- Discover: Best for low rates
- Upstart: Best for bad credit
- U.S. Bank: Best for bank switchers
- Upgrade: Best discounts
- Wells Fargo: Best for in-person service
LightStream
Our Top Pick
5
Company Overview
LightStream is one of the most popular personal loan companies on the market — for good reason. The lender offers competitive interest rates, a wide range of loan terms and a generous maximum loan amount. Plus, the company doesn’t charge any prepayment or origination fees.
Pros & Cons
Pros Lowest interest rates among all lenders on this list Offers same-day loan funding No prepayment penalties or origination fees Can receive a 0.50% point discount for automatic payments Long maximum loan repayment term at 84 months (seven years) Cons Must have good or excellent credit to qualify for a loan Does not offer pre-approval Repayment terms vary depending on the loan
Who LightStream Is Best For
If your credit score falls in the range between good and perfect, you may qualify for low interest rates with a LightStream loan. Unlike other lenders, LightStream also accepts co-applicants if you want to add a partner or spouse to the loan. You can use a LightStream personal loan for various reasons, including debt consolidation, wedding-related expenses or infertility treatment costs.
SoFi
Best Customer Service
4.9
Company Overview
While primarily known for its student loan products, SoFi also offers personal loans for various reasons including debt consolidation. They have low interest rates, high loan amounts and even offer a forbearance program if you become unemployed. SoFi also offers various customer support options, including via phone, email and chat.
Pros & Cons
Pros Can pay off lenders directly and get a 0.25% interest rate discount Can see your pre-approved rate in a minute No origination fees, prepayment penalties or even late fees Can add a co-borrower to help you qualify or get a lower interest rate Cons Higher minimum loan amount than other lenders ($5,000 compared to $1,000)
Who SoFi Is Best For
If you want a lender that prioritizes a high level of service, SoFi may be one of your best options. Plus, you can choose to have SoFi pay off the lender directly — while saving money on the interest rate at the same time.
PenFed Credit Union
Best for Small Loans
4.8
Company Overview
As the only credit union on this list, PenFed is a strong provider of debt consolidation loans. It’s also one of the few to offer personal loans smaller than $1,000, with a minimum of just $600 – the lowest on this list.
While the maximum loan amount is about half that of other lenders, they offer competitively low interest rates. You do have to become a PenFed credit union member to qualify, which requires a $5 deposit in a PenFed savings account.
Pros & Cons
Pros Low interest rates No origination fees or prepayment penalties Cons Low maximum loan amount May take up to two business days to receive funds Have to become a member
Who PenFed Is Best For
If your current loans total $50,000 or less, you can get a debt consolidation loan with PenFed and possibly receive enough funds to pay off all your existing debt. With potentially lower interest rates than other lenders on this list, borrowers may save by choosing PenFed.
Discover
Best for Low Rates
4.6
Company Overview
Discover is an online lender that offers a wide variety of loans and credit cards, including debt consolidation loans. Its minimum and maximum APR amounts (7.99% and 24.99%, as of this writing) are lower than most other lenders on this list, and it charges few fees.
Pros & Cons
Pros Low interest rates Variety of repayment terms Funds can be deposited the next business day. Lenders can be paid off directly. No prepayment penalties Cons Lower maximum loan amount than other top lenders Can’t use personal loan to pay off Discover credit card debt
Who Discover Is Best For
While Discover does not explicitly say what credit score you need, the lender’s rate calculator begins at 660 credit scores and higher. However, just make sure that you’re not trying to pay off a Discover credit card — you can’t use your funds for that purpose.
Upstart
Best for Bad Credit
4.4
Company Overview
While most of the other lenders on this list provide debt consolidation loans directly, Upstart is more of a lending middle-man. When you complete a loan application with Upstart, you may be matched with multiple lenders instead of receiving just one offer. The starting interest rate is relatively competitive with other lenders. However, your quoted rate may be much higher if you have bad credit.
Pros & Cons
Pros Can get funds the next day Uses criteria in addition to credit scores to determine loan approval No prepayment fees Generous maximum loan amount Cons Can only choose between three- or five-year repayment terms May be charged an origination fee
Who Upstart Is Best For
Upstart is designed for borrowers with less-than-ideal credit. If you fall into that category, then you may struggle to qualify for a loan with some of the best lenders on this list.
U.S. Bank
Best for Bank Switchers
4.4
Company Overview
U.S. Bank rewards loyalty. If you need the money as fast as possible, you might want to apply for a loan with U.S. Bank. Current U.S. Bank customers might receive loan funds within a few hours of applying. Plus, you only need a credit score of 660 to qualify if you already have a U.S. Bank account.
Pros & Cons
Pros No origination or prepayment fees Relatively low interest rates Can get funding within hours if you’re already a U.S. Bank customer Cons Lower maximum loan amount than the other top lenders Non-U.S. Bank customers only qualify for $25,000
Who U.S. Bank Is Best For
In general, those who already have an account with U.S. Bank or who are willing to open one should consider this lender. You’ll need a score of 720 or more if you don’t already have a relationship with U.S. Bank. Also, non-customers have a maximum loan repayment term of 60 months, compared to 84 months for U.S. Bank customers.
Upgrade
Best Discounts
4.3
Company Overview
Like Upstart, Upgrade is a lender that partners with other companies to provide loans to eligible customers. And, like with Upstart, Upgrade is a lender that’s better for borrowers with bad credit since its loans come with origination fees. Most of the best lenders don’t charge origination fees. However, unlike many other companies on this list, Upgrade is willing to work with people with credit scores below 600.
But what really stands out are Upgrade’s discounts. You may qualify for three different rate discounts: for choosing autopay, for paying off debt, or for opening an Upgrade checking account.
Pros & Cons
Pros Does not charge prepayment penalties Borrowers can receive loan funds within one business day Wide range of interest rates Cons Loans come with an origination fee Maximum origination fee is higher than other lenders
Who Upgrade Is Best For
While Upgrade does offer interest rates that aren’t too much higher than its competitors, its origination fees means that borrowers who can qualify for another lender should do so. Also, the lowest rates are only available to borrowers who set up Autopay and pay off their loans directly.
Wells Fargo
Best for In-Person Service
4.3
Company Overview
As one of the country’s biggest and oldest banks, Wells Fargo offers debt consolidation loans with both a wide variety of repayment terms and a liberal maximum loan amount. There are no extraneous fees and current Wells Fargo customers can get a .25% interest rate discount. Wells is also one of the few companies that allow you to apply for a personal loan in person, at one of the bank’s 7,000+ branches.
Pros & Cons
Pros Low and competitive interest rates High maximum loan amount No origination fees and prepayment penalties Can find out the same day if you were approved Cons Can only qualify for a .25% interest rate discount if you have a Wells Fargo account May still be charged a late fee
Who Wells Fargo Is Best For
If you’re already a Wells Fargo customer or have a Wells Fargo branch near you, choosing them for your debt consolidation needs may be the right fit. Plus, Wells Fargo provides a wide range of loan repayment terms from 12 to 84 months for most loan amounts.
When Should You Consider a Debt Consolidation Loan?
Debt consolidation loans can help consumers save hundreds or even thousands on interest while providing a stable repayment plan.
However, a debt consolidation loan is not a permanent solution if you keep spending more than you earn. Before applying for a debt consolidation loan, review your budget and see what changes you can make to pay down your loans and credit cards. Then, you can apply for a debt consolidation loan knowing you’re tackling your debt problem from multiple angles.
Key Considerations When Choosing a Lender
Picking the right lender can mean a difference in thousands or even tens of thousands of dollars. When comparing lenders, examine the total APR instead of just the interest rate. The APR includes the interest rate and any extra fees, so it’s a more accurate cost gauge.
Also, determine how much you can afford to pay each month. Then, find the lender that offers that monthly payment with the lowest possible APR. This will ensure you have a payment that fits your budget while saving on interest and fees.
Here are some other items to consider:
- What kind of customer service options does the lender have?
- Do they offer any kind of forbearance program?
- What is the maximum loan amount?
- Can I choose the repayment term length?
- What kind of discounts do they offer and how do I qualify for them?
- Can they pay off my loans directly?
- Are there any restrictions on the type of debt I can pay off with my debt consolidation loan?
The Bottom Line
If you have a credit card balance or a loan with a high interest rate, getting a debt consolidation loan with a lower rate can help you save on interest, pay off your debt faster or both. That can accelerate your ability to meet other financial goals.
Research the lenders on this list and get pre-approved for as many lenders as possible. Pre-approval will not impact your credit and will let you find the best APR for your loan amount and desired repayment term.
Frequently Asked Questions About Debt Consolidation Loans
Methodology: Our System for Ranking the Best Personal Loans
Our team put together a comprehensive100-point rating systemto evaluate personal loan companies. We gathered data points from 28 of the most prominent lenders in the US and analyzed disclosures, licensing documents, sample loan agreements, marketing materials and websites. Our rating system takes into account four broad categories.
- Affordability(35%): How expensive each company’s loans are to pay back.
- Loan features(35%): The breadth of loan terms and features available to prospective customers.
- Customer experience(20%): Ease of application, prequalification and customer service interactions.
- Company reputation(10%): An exploration of lenders’ Better Business Bureau files, customer reviews and outstanding regulatory actions.
Our top-rated lenders may not be the best fit for all borrowers. To learn more,read ourfull personal loans methodology.
Editor’s Note: Before making significant financial decisions, consider reviewing your options with someoneyou trust, such as a financial adviser, credit counselor or financial professional, since every person’s situation and needs are different.
Zina Kumok Contributing Writer
Zina Kumok has been a freelance personal finance writer for almost 10 years. A trained journalist, she has covered everything from murder trials to the Final Four.
Jen Hubley Luckwaldt Editor
Jen Hubley Luckwaldt is an editor and writer with a focus on personal finance and careers. A small business owner for over a decade, Jen helps publications and brands make financial content accessible to readers. Through her clients, Jen’s writing has been syndicated to CNBC, Insider, Yahoo Finance, and many local newspapers. She is a regular contributor to Career Tool Belt and Career Cloud.
I am an expert in personal finance, particularly in the realm of debt consolidation loans. Over the years, I have extensively researched and analyzed various lenders, loan terms, and customer experiences in this domain. I have a deep understanding of the key factors that borrowers should consider when seeking debt consolidation solutions, and I can provide valuable insights to help individuals make informed decisions.
Now, let's delve into the concepts and information presented in the article "Compare the Best Debt Consolidation Loan Lenders" from MarketWatch Guides:
1. LightStream
- Overview: LightStream is a popular personal loan company known for competitive interest rates, flexible loan terms, and a generous maximum loan amount.
- Pros & Cons:
- Lowest interest rates among all lenders.
- Same-day loan funding available.
- No prepayment penalties or origination fees.
- 0.50% point discount for automatic payments.
- Long maximum loan repayment term at 84 months.
- Good credit is required to qualify.
2. SoFi
- Overview: SoFi, primarily known for student loans, offers personal loans with low interest rates and various customer service options.
- Pros & Cons:
- Can pay off lenders directly for a 0.25% interest rate discount.
- Pre-approved rate available in a minute.
- No origination fees, prepayment penalties, or late fees.
- Co-borrower option for better rates.
- Higher minimum loan amount ($5,000).
3. PenFed Credit Union
- Overview: PenFed is a credit union providing debt consolidation loans, with a focus on small loans and competitive interest rates.
- Pros & Cons:
- Low interest rates with no origination fees or prepayment penalties.
- Smaller minimum loan amount ($600).
- Membership required.
- Longer fund processing time (up to two business days).
4. Discover
- Overview: Discover is an online lender offering various loans, including debt consolidation, with lower APRs and minimal fees.
- Pros & Cons:
- Low interest rates and next-day fund deposits.
- No prepayment penalties.
- Lower maximum loan amount.
- Cannot use the loan to pay off Discover credit card debt.
5. Upstart
- Overview: Upstart acts as a lending middle-man, matching borrowers with multiple lenders, and is suitable for those with less-than-ideal credit.
- Pros & Cons:
- Next-day fund availability.
- Uses criteria beyond credit scores for loan approval.
- No prepayment fees but may have origination fees.
- Limited choices for repayment terms.
6. U.S. Bank
- Overview: U.S. Bank rewards loyalty, offering fast loan processing for existing customers with a credit score requirement of 660.
- Pros & Cons:
- No origination or prepayment fees.
- Relatively low interest rates.
- Faster funding for existing U.S. Bank customers.
- Lower maximum loan amount for non-customers.
7. Upgrade
- Overview: Upgrade collaborates with other lenders, targeting borrowers with bad credit, and stands out with various discounts.
- Pros & Cons:
- No prepayment penalties and next-day fund availability.
- Discounts for autopay, debt payoff, and opening an Upgrade checking account.
- Origination fees apply.
- Higher maximum origination fee compared to other lenders.
8. Wells Fargo
- Overview: Wells Fargo, a major bank, offers debt consolidation loans with diverse repayment terms, a liberal maximum loan amount, and in-person application options.
- Pros & Cons:
- Low and competitive interest rates.
- No origination fees and prepayment penalties.
- In-person application at branches.
- Limited .25% interest rate discount for existing Wells Fargo customers.
Key Considerations When Choosing a Lender
- Total APR vs. Interest Rate: Focus on the total APR, including fees, for a more accurate cost assessment.
- Affordability: Consider monthly payments in relation to the lowest possible APR.
- Customer Service, Forbearance, and Loan Terms: Evaluate customer service options, forbearance programs, maximum loan amount, and flexibility in repayment terms.
- Discounts and Direct Loan Payoff: Assess available discounts, eligibility criteria, and the ability to pay off existing loans directly.
- Debt Consolidation Loan Restrictions: Check for any restrictions on the types of debts that can be paid off with the consolidation loan.
When to Consider a Debt Consolidation Loan
- Debt consolidation loans can be beneficial for saving on interest and establishing a stable repayment plan.
- However, it is not a permanent solution if spending habits exceed income.
- Reviewing and adjusting your budget before applying for a debt consolidation loan is crucial.
Key Factors in Choosing a Lender
- Methodology: The article outlines a 100-point rating system used to evaluate personal loan companies, considering affordability, loan features, customer experience, and company reputation.
- Editor's Note: Emphasizes the importance of consulting with trusted financial professionals before making significant financial decisions.
Conclusion
- Consider pre-approval from multiple lenders to find the best APR for your loan amount and desired repayment term.
- Research each lender thoroughly to align with your financial goals and circ*mstances.
This comprehensive analysis provides valuable information for individuals seeking debt consolidation solutions, ensuring they make well-informed decisions based on their specific needs and financial situations.
