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Comparison of The Best Debt Consolidation Loans

If you're looking for a more cost-efficient and practical way to pay off existing debt, consider debt consolidation loans. It's never too late to bounce back and eliminate all existing debt through payoff loans, but you need to make better decisions on the loan terms you agree to.

Before we start reviewing the best lenders who can help consolidate credit card debt and personal loans, let's make one thing clear: being in debt is nothing to be ashamed of. In fact, reports show that the average American has around $90,000 worth of debt. This is a combination of accumulated credit card balances, insanely high student loans, unpaid personal loans, among others.

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Avant
Works best for those with bad credit scores
Offers next-day funding
Performs soft credit checks
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SoFi
Offers high loan amounts for their clients, up to $100,000
Guarantees unemployment protection
Works best for big loan consolidations
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Discover
Offers flexible loan terms
Provides both fixed and variable APR fees and interest payments
Allows term length extension for up to seven years
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Payoff
Works best for those who want to pay off existing credit card loans
Consolidates total loan amount with reasonable interest rates
Accepts applicants with a long credit history
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LightStream
Offer the lowest interest rates on the market
Grants rate discounts for clients with excellent credit backgrounds
Provides term length extensions for up to seven years

Now, if you don't want to file for bankruptcy but wish to address existing debt, get a debt consolidation loan. Adjust repayment terms to get a lower interest rate, reduced overall payable loan amount, free origination fee, and more reasonable monthly payments. Are you still a bit confused as to how debt consolidation loans work? Check out AnyCredit! We have dozens of insightful articles on our website that go in-depth on multiple bank products such as loans and credit cards, among others.

5 Best Debt Consolidation Loans for Different Types of Debtors

1. Best for Borrowers with Bad Credit Scores: Avant

  • Loan Amount:$2,000 - $35,000
  • APR: 9.95% - 35.99%
  • Term Length: 24 to 60 months
  • Min. Credit Score: 550+

It's no secret that unpaid credit card dues and personal loans negatively affect your credit score. Missing even a few monthly payments can already cause the score to plummet. Ironically, many loans for debt consolidation actually require applicants to have excellent credit backgrounds. If you're looking to apply for a debt consolidation loan but have a terrible credit score, check out Avant. They are very lenient with their credit history checks and borrowers only need a minimum score of 550 to qualify for a debt. Note that very few institutions work with anyone below 600, and even FHA loan offers are only available to borrowers with a score of at least 580 They also have next-day funding. This makes things much easier for debtors who are in a pinch and need the funds credited to their bank account right away so they can make the necessary payments. Perhaps the only downside here is Avant charges a loan origination fee. Bear in mind, however, that the company performs soft credit checks—inspections that do not affect credit scores—so a meager origination fee is understandable.

2. Best for Consolidating Large Loan Amounts: SoFi

  • Loan Amount: $5,000 - $100,000
  • APR: 5.99% - 25.05%
  • Term Length: 24 to 84 months
  • Min. Credit Score: 680+

What sets SoFi apart from the rest are the high loan amounts they offer clients. While other brands cap at $50,000, you can get approved for a loan of up to $100,000 at SoFi—that's double the industry standard. This is ideal for those who need to consolidate large loan amounts. Another feature worth mentioning is their unemployment protection. It allows the debtor to temporarily halt payments in three-month increments—not exceeding a total of 12 months—in the event that they lose their job. Unemployment protection is crucial since high consolidated loan amounts equate to a high monthly payment as well. And debtors won't be able to pay them if they've just lost their primary source of income. Perhaps the only downside here is you cannot use SoFi for small loan consolidations. They have a minimum loanable amount of $5,000, but it's easier to qualify for higher options.

3. Most Flexible Repayment Terms: Discover

  • Loan Amount: $2,500 - $35,000
  • APR: 6.99% - 24.99%
  • Term Length: 36 t0 84 months
  • Min. Credit Score: 680+

For a flexible, customizable repayment term, check out Discover. They offer the most flexible loan terms with both fixed and variable APR fees and interest payments ranging anywhere from 6.99% to 24.99% per month. Plus, term lengths can extend up to seven years. Perhaps the only downside here is you'll need a good credit history to qualify for a loan. The minimum required score is 680, but the average credit score of their borrower is at a steep 750. Although, good credit is expected if you want good rates.

4. Best for Consolidating Unsettled Credit Card Balance: Payoff

  • Loan Amount: $5,000 - $40,000
  • APR: 5.99% - 24.99%
  • Term Length: 24 to 60 months
  • Min. Credit Score: 640+

If you're looking specifically for a way to pay off all your existing credit card loans, try Payoff. They primarily target debtors with unpaid balances on their credit cards. What they do is assess your existing debt, determine the interest rate on each card, consolidate the total loan amount, then provide you a new loan with a more reasonable interest rate. However, debtors should bear in mind that Payoff charges an origination fee of up to 5%. They also only work with applicants backed by a long—not necessarily good—credit history. Although, the fee and the trouble might be worth it if you're consolidating multiple cards.

5. Lowest Debt Consolidation Loan Interest Rates: LightStream

  • Loan Amount: $5,000 - $100,000
  • APR: 4.49% - 20.49%
  • Term Length: 24 to 84 months
  • Min. Credit Score: 660+

If you're in the market for the lowest rates available, check out Lightstream. They have the lowest interest rates on that market at 4.49% - 20.49% with a term length extendable up to a whopping seven years. What's more, is they offer a rate discount to clients with an excellent credit background. If you are at around 750 and are willing to sign up for automatic payments, you can qualify for the special discounted rates of 3.99% to 19.99%. The only issue here is their offers are limited to those with good credit histories. Also, they don't have pre-qualification options, so if you fail their assessment, your credit score will take a hit.

Final Thoughts

Do not automatically assume that a specific type of debt consolidation loan may also work on you if it has worked on other borrowers. There's no universal solution to consolidating credit card debt and other existing loans. You need to find a plan that matches your credit profile, monthly payments capacity, and debt-to-income ratio findings, among others.

Additional Resources

The average debt of the working American Reports show that the average American has around $90,000 worth of unpaid debt. This report by CNBC goes more in-depth and details exactly how much the average borrower owes based on what age bracket they belong to. On the fence on where to apply for a personal loan or credit card debt consolidation plan? Head on over to AnyCredit! We have dozens of buyers guides on our website that feature the best institutions that offer the lowest interest rates on their debt consolidation loans.

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