Best Debt Consolidation Loans of 2025

Debt consolidation has become a popular solution for individuals managing multiple debts with varying interest rates and payment schedules. Consolidating debt involves combining several debts into a single new loan, making it easier to manage and reducing the risk of missed payments. While debt consolidation loans may not be suitable for everyone, they offer a viable alternative for simplifying the debt repayment process.

What to know about debt consolidation loans

• A debt consolidation loan is essentially an unsecured personal loan.
• Favorable interest rates, timely payments, and avoiding additional debt accumulation make debt consolidation loans effective.
• The best debt consolidation loans offer prequalification, online approval, flexible terms, competitive interest rates, and no fees or prepayment penalties.
• These loans are commonly used to consolidate high-interest credit card debt, providing fixed rates for easier budgeting.
• Some lenders may charge origination fees, deducted from the loan proceeds.
  

  How we chose our top picks
  

  Our team independently evaluated debt consolidation loans based on interest rates, fees, terms, flexibility, and customer satisfaction. After reviewing over 30 lenders, we selected the top options based on various criteria to ensure accuracy and editorial integrity.

  Our top picks for best debt consolidation loans of May 2025
  

  Discover
  

• Pros: No origination fee, same-day approval, ranked #2 in J.D. Power 2024 U.S. Consumer Lending Satisfaction Survey.
• Cons: Minimum household annual income requirement, late payment fee, restrictions on fund usage.
• Highlights: APR ranging from 7.99% to 24.99%, loan amounts from $2,500 to $40,000, term options from 36 to 84 months, no specified minimum credit score.

  Discover stands out for its low interest rates, efficient payment processing, and high customer satisfaction ratings. With competitive rates and no origination or prepayment fees, Discover is a top choice for those seeking a reliable debt consolidation loan.

  Happy Money
  

• Pros: Lending network includes credit unions, user-friendly website, some partner lenders accept fair credit.
• Cons: Minimum APR for larger loans, limited availability in certain states, potential high origination fees.
• Highlights: APR from 8.95% to 29.99%, loan amounts from $5,000 to $40,000, term options from 24 to 60 months, minimum credit score of 640.

  Happy Money offers a diverse network of lenders and competitive rates for borrowers with varying credit profiles. While some partner lenders may charge higher fees, Happy Money’s transparent approach and credit union partnerships make it a solid choice for debt consolidation.

  LightStream
  

• Pros: No origination, late payment, or prepayment fees, rate discount for setting up Autopay.
• Cons: No loan pre-approvals, limited application methods, Autopay discount conditions.
• Highlights: APR from 7.49% to 25.79% (with Autopay discount), loan amounts from $5,000 to $100,000, term options from 36 to 240 months, no specified minimum credit score.

  LightStream, a brand of Truist Bank, offers large loan amounts with flexible repayment terms and competitive APRs. With no mandatory fees and an Autopay discount, LightStream is ideal for borrowers seeking high-value consolidation loans.

  PenFed
  

• Pros: Loans as low as $600 available, accepts co-borrowers, no origination or prepayment fees.
• Cons: Membership requirement, additional steps for loan qualification.
• Highlights: APR from 8.99% to 17.99%, loan amounts from $600 to $50,000, term options from 12 to 60 months, no disclosed minimum credit score.

  PenFed is a top choice for individuals seeking small debt consolidation loans with low interest rates and no additional fees. While membership is required, PenFed’s customer-centric approach and minimal loan requirements make it a reliable option for debt consolidation.

  SoFi
  

• Pros: Informative website, Autopay discount, multiple rate reduction options.
• Cons: High origination fees, limited term choices, additional requirements for discounts.
• Highlights: APR from 11.69% to 35.99%, loan amounts from $1,000 to $5,000, term options from 36 to 50 months, minimum credit score of 560.

  SoFi offers a comprehensive debt consolidation solution with various rate reduction options and competitive APRs. While origination fees may apply, SoFi’s commitment to customer satisfaction and flexible repayment terms set it apart in the market.

  Other debt consolidation loan companies we considered
  

• Axos Bank: Offers competitive APRs with a minimum credit score requirement.
• Best Egg: Requires a higher income threshold for the lowest APR, with additional fees for longer terms.
• Universal Credit: Provides options for borrowers with bad credit, though origination fees are higher.
  

  What you need to know about debt consolidation loans
  

  Debt consolidation loans are an effective way to simplify debt repayment and reduce overall interest costs. By combining multiple debts into a single loan with favorable terms, borrowers can streamline their financial obligations and work towards debt freedom.

  How do debt consolidation loans work?
  

  Debt consolidation loans merge various debts into a single, lower-interest loan, based on the borrower’s creditworthiness. These loans are commonly used to consolidate high-interest credit card debts, offering a more manageable repayment structure.

  Is a debt consolidation loan right for you?
  

  Debt consolidation loans are ideal for individuals with good credit and a history of on-time payments. If you qualify for lower interest rates and favorable terms, a debt consolidation loan can help you save money and simplify your financial obligations.

  Alternatives to debt consolidation loans
  

• Home equity loans: Use your home as collateral for a lower-rate loan.
• Balance transfer credit cards: Transfer high-interest balances to a card with a promotional 0% APR.
• Credit counseling: Enroll in a debt management plan with a non-profit agency.
• Debt settlement or bankruptcy: Explore more drastic options if you’re unable to make payments.
  

  How to get a debt consolidation loan
  

  1. Check your credit score and financial status.
  2. Calculate your total debt and interest rates.
  3. Research and compare lenders for the best terms.
  4. Determine your monthly budget and debt-to-income ratio.
  5. Choose a lender with lower rates than your current debts.
  6. Consider a cosigner for better approval odds.
  7. Apply for the loan and review the offer carefully.
  8. Receive the funds and pay off your debts accordingly.
     

     How to get a debt consolidation loan with bad credit
     

• Consider secured loans with collateral.
• Add a cosigner with good credit for better rates.
• Explore lenders specializing in bad credit loans.
  

  What to look for when choosing a debt consolidation loan
  

• Interest rates: Compare APRs and seek lower rates than your current debts.
• Fees: Check for origination, late payment, and prepayment penalties.
• Loan terms: Evaluate repayment options and flexibility.
• Customer reviews: Consider lender reputation and customer satisfaction.
  

  FAQs about debt consolidation loans
  

• Is debt consolidation a good idea?: Yes, if you can secure lower rates and manage your payments effectively.
• Do debt consolidation loans hurt your credit?: Initially, there may be a minor impact, but consistent payments can improve your credit score.
• What is the best debt consolidation company?: The best company depends on your needs and credit profile, with options like LightStream, PenFed, and SoFi standing out.
  

  Latest debt consolidation loan news
  

  The Federal Reserve Bank of New York reports a growing trend in consumer debt, with credit cards being a primary source of funding. As economic concerns rise, borrowers are turning to debt consolidation loans to manage high-interest debts effectively.

  How we chose the best debt consolidation loans
  

  Our selection process involved evaluating over 30 lenders based on interest rates, fees, application process, and customer satisfaction. By prioritizing affordability and customer experience, we identified the top debt consolidation loan options for May 2025.

  In summary, debt consolidation loans offer a practical solution for individuals seeking to streamline their debt repayment and reduce overall interest costs. By considering key factors like interest rates, fees, and loan terms, borrowers can choose a suitable lender that aligns with their financial goals and credit profile.