6 Top Debt Consolidation Loans in 2023

Marley Allison

June 27, 2023

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If you feel like you’re drowning in a sea of different debts, fear not! Debt consolidation could be the life raft you need. So, let’s dive into what it is, why it might be right for you, and how to get one.

When choosing a debt consolidation company, it’s essential to consider your financial situation’s specific needs and circumstances. Not all debt consolidation companies are created equal, and their services can greatly vary.

Therefore, here are some popular debt consolidation companies that may help you sail smoothly toward financial freedom according to different categories that might fit your needs.

Table of Content

Best for Low-Interest Rates: Marcus by Goldman Sachs
Best for Fast Turnaround: LightStream
Best for Large Amounts of Debt: SoFi
Best for Poor Credit: Avant
Best for Credit Card Debt: Happy Money
Best for Customer Service: Discover Personal Loans
What is Debt Consolidation?
Why Consolidate Debt?

1. Best for Low-Interest Rates: Marcus by Goldman Sachs

The first place you should consider is Marcus by Goldman Sachs. Known for offering some of the lowest interest rates on personal loans in the market, Marcus could be an ideal choice if your primary concern is securing a lower interest rate. Interest rates range from 6.99% to 24.99% APR depending on your creditworthiness.

Marcus doesn’t charge any fees – no sign-up fees, no prepayment fees, and, most importantly, no late fees. You’ll need a good to excellent credit score to qualify, but it’s certainly a solid option for low-cost debt consolidation.

2. Best for Fast Turnaround: LightStream

If time is of the essence and you need a rapid response to your debt consolidation needs, then LightStream can be an excellent choice. The loan approval process is quick, with funds often disbursed as early as the same day of approval.

LightStream offers loans from $5,000 to $100,000 with interest rates between 8.49% to 24.49% APR. They don’t have any fees, but you’ll need good credit to qualify.

3. Best for Large Amounts of Debt: SoFi

If you have a large amount of debt, SoFi might be your best bet. SoFi provides personal loans for up to $100,000, which is on the higher end for debt consolidation loans. Interest rates range from 8.99% to 25.81% APR with autopay, and they do not charge fees for origination or prepayment.

SoFi also provides free financial counseling for its loan customers, which can be a boon for those dealing with large amounts of debt. However, they have stringent credit and income requirements, so be prepared.

4. Best for Poor Credit: Avant

For those struggling with a lower credit score, Avant could be a great option. While interest rates are higher (from 9.95% to 35.99% APR), Avant is more accepting of borrowers with lower credit scores.

They also provide educational resources to help you improve your financial knowledge and credit over time. Avant’s administration fee can go up to 4.75%, but they offer quick funding, usually within one business day.

5. Best for Credit Card Debt: Happy Money

Happy Money, once known as Payoff, can be an excellent choice if you’re looking to consolidate credit card debt. They specialize in loans designed to eliminate high-interest credit card debt, with rates ranging from 10.50% to 29.99% APR. The loan amounts range from $5,000 to $40,000.

One unique feature of Happy Money is its focus on improving your financial behavior. They provide free monthly updates on your FICO score and have a wealth of resources to enhance financial literacy. Payoff charges an origination fee between 0% to 5%.

6. Best for Customer Service: Discover Personal Loans

If top-notch customer service is a priority for you, Discover Personal Loans might be a good choice. They offer 100% U.S.-based customer service every day and a 30-day money-back guarantee if you decide the loan isn’t for you.

The rates range from 6.99% to 24.99% APR, and they offer loans up to $35,000. There are no origination fees, but there is a late fee, so be sure to stay on top of your payments.

What is Debt Consolidation?

Picture this: instead of juggling multiple debts with various interest rates, due dates, and payment amounts, you just have one monthly payment. Sounds dreamy, right?

That’s the beauty of debt consolidation. It combines multiple debts into a single, more manageable loan, ideally with a lower interest rate.

Why Consolidate Debt?

There are several reasons why consolidating your debt might be beneficial. It simplifies your payments, can lower your interest rate, and may even help improve your credit score over time by making it easier to keep track of and make payments.

But remember, while consolidation can streamline your finances, it’s not a magic solution. You’ll still need to pay off your debt and address any spending issues that got you into debt in the first place.

Pros of Debt Consolidation	Cons of Debt Consolidation
Simplified Payments: Instead of managing multiple payments to multiple creditors, you only have to make one payment to one lender. This can make managing your finances much simpler.	Potential for Higher Costs: Depending on the terms of your consolidation loan and your discipline in making payments, you could end up paying more in the long run. If your loan has a longer term, you may pay more in interest over time, even if the rate is lower.
Lower Interest Rates: In many cases, you can get a lower interest rate through debt consolidation, especially compared to rates on credit cards. This means you’ll spend less money on interest over time.	Potential for More Debt: Debt consolidation can free up your credit cards, making it tempting to rack up more debt. Unless you’ve addressed the underlying issues that led to the debt in the first place, you could end up in a worse situation.
Fixed Repayment Schedule: A debt consolidation loan gives you a clear repayment schedule with a set end date. This can be a huge psychological boost and help keep you on track financially.	Fees: Some debt consolidation loans come with fees, such as origination fees or prepayment penalties. These can add to the cost of the loan.
Improved Credit Score: If you’re able to keep up with your payments, debt consolidation can eventually lead to an improved credit score. Timely payments contribute to a good payment history which is a major factor in credit scoring.	Impact on Credit Score: Initially, debt consolidation can lower your credit score as it involves a hard inquiry into your credit report. Furthermore, it also reduces the age of your credit accounts, another factor in credit scoring.

Remember, consolidating debt is a financial strategy that can work well if used correctly. It’s not a magic bullet, but if paired with disciplined budgeting and a plan to address the causes of your debt, it can be a beneficial tool. As always, it’s crucial to understand the terms of any loan before you sign on the dotted line.