The best debt consolidation loans are typically personal installment loans with fixed interest rates and fixed monthly payments. As with other types of personal loans, debt consolidation loans are offered by many banks, credit unions, personal loan fintech companies, and other kinds of lenders. So if you're struggling with high-interest debt and hoping to turn your situation around, a debt consolidation loan could be what you need.

Factors to Consider Before Getting a Debt Consolidation Loan

You'll want to carefully assess your financial situation and find out your credit score before you start researching personal loans. After all, you need to know for sure that you could afford to make the monthly payments, and that you have a credit score that's high enough to qualify for a loan with better rates than you're paying now.

Consider these factors before you apply for debt consolidation:

• Available loan amounts: While lenders vary, you may be able to borrow between $1,000 and $100,000 for this purpose.
• Eligibility requirements: Some lenders extend financing only to people with very good to excellent credit, but others accept consumers with fair or even poor credit.
• Interest rates: Compare lenders based on the annual percentage rates (APRs) they offer to find the lowest rate you can qualify for.
• Loan fees: Watch out for origination fees, which are deducted from the loan amount you receive upfront, leaving you with less money to pay off your debts. Additionally, check for any prepayment penalties or other fees.
• Repayment terms: Find out how long you'll have to pay off your loan and keep in mind that your monthly payment can vary based on the repayment term you choose. Typically, the longer the repayment term, the less you'll have to pay each month, but the more you'll pay in total interest over the life of the loan.

Best Lenders for Debt Consolidation Loans

The chart below highlights some of the best debt consolidation loans available today, how much funding they offer, repayment terms, and current interest rates.

	Best For	Loan Amounts	Repayment Terms	APRs
Discover	No fees	$2,500 to $40,000	36 to 84 months	7.99% to 24.99%
Happy Money	Improving credit	$5,000 to $40,000	24 to 60 months	11.72% to 17.99%
LightStream	Borrowers with excellent credit	$5,000 to $100,000	38 to 84 months	7.49% to 25.99%
SoFi	Unemployment protection	$5,000 to $100,000	24 to 84 months	8.99% to 29.49%
Upgrade	Borrowers with imperfect credit	$1,000 to $50,000	24 to 84 months	8.49% to 35.99%

How to Apply for a Debt Consolidation Loan

Applying for a personal loan for debt consolidation is a relatively simple process. Here are the steps involved:

• Step 1: Compare lenders: Spend some time comparing lenders based on their available loan amounts, repayment terms, interest rates, fees, and other factors. Narrow your list down to three or four lenders.
• Step 2: Check your rate with several lenders: You should be able to get pre-approved with a few lenders without triggering a hard inquiry on your credit reports. (A hard inquiry can have a negative impact on your credit score.) Doing so will help you determine which lenders might offer you the funding you need with the best rates and terms.
• Step 3: Provide personal and financial information: Move forward with an application with the lender you select. You'll need to provide a variety of information, such as your employment status and annual income.
• Step 4: Submit any additional documentation that's required: You may be asked to upload certain documentation for your loan application, including pay stubs, income tax returns, or bank statements.
• Step 5: Wait for an answer: Many lenders will provide you with an answer within a few hours, while others may take a few business days.
• Step 6: Watch for your loan funds. If you're approved, the money may be sent directly to your bank account, so keep an eye on your balance. However, some lenders will instead pay off your other loans directly.

Alternatives to Debt Consolidation Loans

If you're on the fence about consolidating debt with a personal loan, there are several other loan options to consider. These include:

• Balance transfer credit cards: A balance transfer credit card will let you consolidate your existing credit card debt at interest rates as low as 0% APR for a certain period, such as 12 months. After that, the card's regular variable APR will apply. Typically, these cards also charge upfront balance transfer fees (usually 3% or 5% of the amount you transfer).
• Home equity loans: Home equity loans are similar to personal loans in that they have fixed interest rates, fixed monthly payments, and set repayment terms. However, these loans require that you have sufficient equity in a home and are willing to use it as collateral. If you can't repay the loan, your home can be subject to foreclosure.

In addition to other types of credit, there are some additional ways to begin reducing the amounts you owe. They include:

• Credit counseling: Many not-for-profit credit counseling agencies offer free consultations and help in figuring out a plan for your debt. If you go this route, the Federal Trade Commission (FTC) says to vet organizations you find with your and .
• Debt management plans: These plans are offered by third-party companies, and they require you to make a single payment to them so they can pay back your creditors. These companies also work with your creditors to get you lower rates and fees with the goal of helping you pay down debt faster. But make sure you're dealing with a reputable one.
• Debt settlement: These plans are also offered by third-party companies. Typically, they ask you to stop making payments on your credit cards and other debts and make a payment to a savings account in your name instead. Funds that are built up in that account will eventually be used to settle debts for less than you owe. At least, that is how it is supposed to work. However, there are many risks involved with debt settlement, including the potential for considerable damage to your credit. In addition, your creditors aren't required to settle and may sue you.

The Bottom Line

A debt consolidation loan can reduce the amount of interest you're paying on your debts and allow you to pay them off more quickly. The best loans are easy to find online, and most lenders are relatively transparent when it comes to their available loan amounts, fees, interest rates, and eligibility requirements.