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Best debt consolidation companies 2020: A single loan to cover multiple debts

The best debt consolidation companies allow you to take out a single loan to pay for the sum of your multiple existing loans.  

Why consider debt consolidation? Debt can easily accumulate. If you have multiple loan providers, it can be hard to juggle which loan to pay and when. If you’re struggling to keep up with credit card bills, medical expenses, and loan repayments, then it might be worth looking into debt consolidation. 

This means that rather than paying back multiple loans, you take out one additional loan that takes care of all your existing debt which you then agree to pay back on your own time and terms. A single loan can help you better manage your money, reduce interest and gradually assist you out of debt. However, before signing up for debt consolidation, read the fine print on your existing loans closely - you may lose certain benefits or incentives or it simply may not be for you. 

Looking for debt settlement?

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Consolidation loans can vary from specialist company loans to personal loans, and this is mainly to do with your current credit score. Depending on the rate at which the consolidation loan is arranged, this may mean that you end up paying more money than originally owed. However, depending on the interest rates you are currently paying you might be able to save in the long run. 

Still, be prepared to have a frank conversation about your finances when searching for the right consolidation loan for you.

Debt consolidation vs debt settlement

Debt consolidation and debt settlement are two ways of dealing with debt, and though they are sometimes used to mean the same thing, they are actually quite different. 

Debt consolidation essentially refers to a single loan you take out to cover debts with the aim of reducing the overall cost of multiple debts, or to reduce monthly payments to make the debt more manageable. Discover is our top debt consolidation provider and you can visit its site here.

Debt settlement seeks to also make debt easier to handle by paying into one pot, rather than to multiple different creditors. However, it takes on your debt in a different way. 

Using a debt settlement company means you have a specialist who negotiates your debts for you, often reducing them significantly. This does come with a fee attached, but can still save you thousands of dollars on your overall debt.  A main downside is that debt settlement can have a negative impact on your credit rating and can be stressful until negotiations have reached an end. 

Our top choice of debt settlement companies is National Debt Relief. Their debt counselors can advise you on reducing your debts regardless of whether you decide to use the service, so it's worth getting in touch with them by visiting National Debt Relief's website here.

If you have a good credit history then you should be able to get a low annual percentage rate (APR) that can reduce your monthly interest. You can expect anything from 6% APR to around 18% APR depending on your circumstances and multiple factors such as debt amount and income.

However, if you have a bad credit score then the APR will be likely much higher, and you may not even qualify for a debt consolidation loan. If that is the case you can look to improve your score using a credit repair service or read our guide to the best debt settlement companies.
Be aware that while your monthly payments and interest may be reduced with a debt consolidation loan, it could also mean you end up paying more overall and over a longer period of time. This is especially the case if you choose a loan with a longer repayment term. 
For example, if you consolidate a $10,000 loan at 20% APR over three years and a $5000 loan at 30% APR over two years you will be paying $1,362 a month for two years and $706 a month in the final year. That will be a total repayment of $41,187 over three years. 
If you consolidate those loans with an 18% APR over six years then you will be paying $619.23 a month, but your total repayment will be $44,585. So you’re paying $3398 more overall, but the reduced monthly payment may be what can really help you right now. You can work with a debt specialist to see what your budget allows for and what your best options are. 

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National Debt Relief is one of the best debt settlement solution providers. Customer service and debt negotiation are provided in-house, and its average rate of debt reduction is the highest we've found.
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1. Discover: Best overall

Discover Bank

(Image credit: Discover)

Discover Debt Consolidation

Discover offers a full range of services, but the debt consolidation service stands out amongst its offerings

Information Support: Online through their website Credit Resource Centre | Support: Phone 24/7 inside and outside of the US, Live chat, Social Media | Interface: Computer, tablet, and mobile.

A great range of online tools to help you manage your money
Dedicated U.S based support team
No penalties for early paybacks
You still need a family income of $25,000 to apply
Below average maximum loan amount
Unsecured loans

Discover is one of the leading online bank and payment service companies in the U.S that wants people to be able to spend smarter, manage their debt and be able to save money for a secure financial future.

The bank offers a full range of services including credit products, but the debt consolidation service stands out amongst its offerings. They give you tools that not only let you manage your existing debt but also help build your credit rating.

From a fixed rate of interest to paying your creditors for you, it means any little extras saved could see you repaying the loan earlier than first thought. Although it’s worth noting that while you can pay more off each month, you will not receive a refund of any interest charges you have may have already incurred.

That means that a Discover debt consolidation loan has no loan origination fees, closing costs, or prepayment penalties. Simply put, as long as you pay on time, there are no fees associated with your personal loan for debt consolidation.

Discover offers unsecured debt consolidation loans of up to $35,000, but you can get debt consolidation loans of up to $200,000 secured against the value of your house. 

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2. Marcus by Goldman Sachs: Best for those with good credit

Marcus by Goldman Sachs

(Image credit: Marcus by Goldman Sachs)

Marcus by Goldman Sachs

Customers can receive loans of up to $40,000 to help them consolidate existing debts

Information support: Online and over the phone | Support: Online, phone, social media | Interface: Computer, tablet, and mobile

Flexible term
Online application and approval
No application fees
Moderate maximum loan amount
Does not pay creditors directly
High APR for those with bad credit

Marcus by Goldman Sach's offers personal loans for debt consolidation. While the amount varies, customers can receive loans of up to $40,000 to help them consolidate existing debts. The good news is that there are no origination fees associated with getting a loan from Marcus. They offer attractive rates for those with good credit, and even if your credit isn't great, you could still be eligible for a loan - just at a higher rate. 

Marcus' online platform is easy to use, and their pre-application calculator helps give you information about their products before you apply. They have options for people with fair, good, and excellent credit with the best interest rates going to applicants with the best credit. They offer flexible terms to suit your plans, the interest rate is affected by the length of time you borrow the money for, so do keep that in mind.

The application process can be carried out on the website, making it very easy to consolidate your debts from start to finish. They also offer customer care over the phone, either to help with your application or with any questions you might have once you have applied.

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3. InCharge: Best for financial education

InCharge Debt Solutions

(Image credit: InCharge Debt Solutions)


A non-profit that wants people to be able to manage their debt responsibly

Information support: Online through its website Credit Resource Centre | Support: By phone and email from 9am - 10pm ET weekdays and 9am - 6pm ET on Saturdays | Interface: Computer, tablet, and mobile

Credit score is not affected
Affordable payments worked out with credit counselor
Financial education available
Concession granted by lenders can be lost if a payment is missed
There is a setup fee and a monthly service charge
All credit cards will be suspended except for a single emergency card

InCharge is a U.S-based debt consolidation non-profit that wants people to be able to manage their debt responsibly, and avoid getting into financial difficulty again in the future.

The non-profit offers a debt consolidation service for secured and unsecured debt, with credit card consolidation being a common reason why people seek their services.

As an organization, their ethos is that they want all customers to understand how they can manage their finances and use credit responsibly. They hope to help people to develop good financial habits so that once the debt consolidation plan is paid off you will go forward with healthy finances in the future.

InCharge offers a range of educational services for clients, mostly focusing on changing spending habits in the long term. And if you'd like to pay off your loan quicker, there is the ability to set up larger payments too.

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4. Avant: Best for overpayments


(Image credit: Avant)


A huge benefit is that you can make overpayments without being penalized at Avant

Information support: Online and over the phone | Support: Online, social media, telephone | Interface: Computer, tablet, and mobile

Low-interest rate
Easy application online
Funds delivered quickly
Low maximum loan amount
Does not pay creditors directly
Maximum 60-month term

Avant makes applying for your loan easy, and they have a very easy to navigate client area that has a good range of tools to help you track your repayments, and manage your finances going forward. 

A huge benefit is that you can make overpayments without being penalized at Avant, and there is no balloon payment when it comes to closing your account. So as long as you stay on track with your payments there will be no nasty surprises for your finances.

While there are no physical branches, it is relatively easy and clear to get in touch with the right department either by phone or email. 

The application process can be carried out on the website, making it very straightforward to apply. Avant has a great tool to check your eligibility before you apply for a loan without affecting your credit score. Once you have gone through this first stage, you will be able to select a term that suits you. This option puts you in control to plan your repayments around life’s bigger plans.

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5. LightStream: Best for flexible terms


(Image credit: Lightstream)


Offers personal loans at competitive rates, with options for longer-than-average terms

Information support: Online and over the phone | Support: Online, phone | Interface: Computer, tablet, and mobile

Flexible term (up to 12 years)
Online approval
High lending limit
Best rates reserved for excellent credit
Does not pay creditors directly
Must use auto-pay for the best rate

LightStream offers personal loans at competitive rates, with options for longer-than-average terms. The online bank offers loans to suit people who need a cash advance for a wide range of various expenses, such as car loans or medical debt, which can help consolidate with all other existing debts.

The application process can be carried out on the website, making it very straightforward. You can also apply over the phone if you prefer. Once your application is approved, there are different terms you can choose from to suit your future life plans best.

LightStream offers loans of up to $100,000, considerably more than some providers, but they do have more strict approval qualifications than other companies. 

Loans from LightStream do not have an origination fee or late payment fees. Their transparent pricing makes it easy for people who borrow from them to plan their finances around repayments. The terms and rates are fixed too, so even if you simply pay your repayment amount on time, with no overpayments, you'll know exactly when your loan will be paid off.

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6. Wells Fargo: Best for high amounts of debt

Wells Fargo

(Image credit: Wells Fargo)

Wells Fargo

They offer up to $100,000 which few lenders match

Information support: In-branch and online | Support: Online, social media, phone | Interface: Computer, tablet, and mobile

Low-interest rate
High maximum loan amount
Discount available for pre-existing customers
Online application only available to people who already have a Wells Fargo account
Limited debt to revenue ratio
You may need a good credit score to apply

Wells Fargo is a well-known bank that offers loans for multiple purposes, including debt consolidation. They will help clients consolidate credit card debt, other loans, and student debt into one personal loan. 

They offer up to $100,000 which few lenders match. Their products include personal loans and home mortgage refinancing. They do advise that you compile a list of all your current debt before getting in touch with them so that they can find the best solution for your situation.

Customers who already have an account with the bank can apply online, and will also receive a small discount on their repayment rate. New customers will need to go in branch to apply and to discuss the best borrowing option for their circumstances.

One downside is that they do prefer lenders with a high credit score but you can talk to them in advance for tailored advice.

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7. Lending Club: Best for online applications

Lending Club

(Image credit: Lending Club)

Lending Club

They are advocates for responsible lending

Information support: Online and over the phone | Support: Online, social media and phone | Interface: Computer, tablet and mobile

Low-interest rate
Based online
Fixed interest rates
Relatively low maximum loan amount
Does not pay creditors directly
Up to four days to receive funds

Lending Club is a tech company that was founded to deliver creative credit solutions. They are advocates for responsible lending and are leaders in the implementation of new governance in the banking sector. 

They say they are committed to making the process of applying for a personal loan straightforward and stress-free so that means their online application is fairly simple. And they can offer loans of up to $40,000 to help customers pay off credit card debt or store cards. The loan is then offered at a fixed rate for a fixed term, making repayment more straightforward and predictable.

There are high standards that Lending Club uses for checking that people aren’t borrowing beyond their means, so their lending criteria is relatively strict. However, they offer a calculator on their website that allows users to predict what their monthly payments would be, without affecting your credit score. You can apply directly online, or over the phone.

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8. Prosper: Best for those with bad credit


(Image credit: Prosper)


Prosper is an innovator in the peer-to-peer lending market

Information support: Online through their website Credit Resource Centre | Support: Online, social media, phone | Interface: Computer, tablet, and mobile

A fixed end date allows you to plan your finances easily
Only one monthly payment to be made
Home equity options available
You will need to meet certain criteria to apply
No early repayment options
No financial education services

Prosper is an innovator in the peer-to-peer lending market. They offer a personal loan that can be used for lots of things, including debt consolidation. They focus on giving clients good rates and fixed repayment terms to help them plan their spending.

Prosper has low minimum credit score requirements and a minimal credit history term but it’s worth using their free application tool that can help you see if you fit their criteria, and it won’t affect your credit score either.

The company offers a high quality of customer service and can be contacted by phone or online. Prosper has been offering peer-to-peer loans since 2005 and can help you rebuild your credit score if you have let it suffer, or if you simply improve on the one you already have.

There are no fees to apply for a loan through Prosper, but there is an initial fee once the loan application is accepted. Prosper loans come with a fixed interest rate and fixed term, which means they are the ultimate in predictable borrowing, as there are no surprises.

As long as you pay the correct amount each month, and pay on time, you will repay the exact amount set out in the agreement that you sign at the outset.

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9. Payoff: Best for credit card debt

Payoff debt consolidation

(Image credit: Payoff)


Offers loans for people with good credit who are looking to pay off their credit card debts quickly

Information support: Online and over the phone | Support: Online, phone | Interface: Computer, tablet, and mobile

Fixed rate
Flexible terms
No application fees
Only available for those with good credit
Money can only be used to pay off credit card debt
Relatively low maximum lending ($35,000)

Payoff offer loans for people with good credit who are looking to pay off their credit card debts quickly, and get back on track financially.

Their credit card debt consolidation loan comes with very few fees and good interest rates, so you may be able to save money compared to leaving your debt on existing credit cards with high-interest charges.

Their consolidation loans have relatively short maximum terms compared to others, but this is in part because they want to help you get back on your feet as soon as possible.

There are some fees associated with loans from Payoff, such as a variable origination fee, and this is calculated when you enter the terms of your loan. They have, however, done away with other common fees including late payment fees, and early repayment fees. Their interest rates are pretty standard and fall in line with other services who offer consolidation loans to those with good credit.

Best debt consolidation companies list break

National Debt Relief is one of the best debt settlement solution providers. Customer service and debt negotiation are provided in-house, and its average rate of debt reduction is the highest we've found.
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Debt consolidation loans: What are the risks?

While a debt consolidation is less risky than other options, like bankruptcy, it still carries a considerable amount of risk. When you take out a consolidation loan, you are required to put forth collateral. Most often, the required collateral is a second mortgage or a home equity line of credit. This is incredibly risky because if you cannot meet your payments, your home is on the line. Furthermore, if you have bad credit, debt consolidation loans may come with high interest rates.

In addition to putting your home at risk, many consumers end up prolonging their debt. While having one low rate and one payment is an attractive option, many people end up in similar or worse financial situations when attempting credit card debt consolidation. According to Cambridge Credit Corp., a nonprofit credit-counseling agency, 70 percent of Americans who take out consolidation loans end up with the same or more debt after two years.

Best debt consolidation companies: What to look for

When choosing a company to consolidate your debt, it is important to find one that’s reliable and compliant with FTC regulations. Don’t work with a company that doesn’t disclose all the legally required information before encouraging you to enroll.

Accreditations are another key indicator of whether a company adheres to ethical standards. The accreditations listed below are through private agencies, not the government. However, these entities are recognized as authorities in the industry and have missions to promote ethical debt management practices.

The American Fair Credit Council (AFCC), formerly known as the TASC, advocates for consumers. To be AFCC accredited, a company must be fully compliant with FTC regulations and undergo an annual renewal process.

The International Association of Professional Debt Arbitrators (IAPDA) offers certifications and exercises for debt specialists. The employees at companies that are IAPDA certified have been professionally trained in debt management best practices and upholding ethical standards.

The United States Organizations for Bankruptcy Alternatives (USOBA) has rigorous standards that go beyond FTC regulations, and debt consolidation companies must adhere to them to be certified.

Lastly, look closely at the supplemental resources a company offers. While any company can provide negotiation or consolidation services, the best ones provide solutions for managing your finances and staying out of debt. Any company that’s looking for repeat customers should be avoided.

Debt consolidation and transparency

How forthcoming a company is with information is a huge factor when choosing a debt consolidation company. Before you sign anything, make sure you understand the company’s history. Due to the New Rule, there are things a company legally must disclose to you before you enroll in its program. These include educated estimates of the potential length of your program, the cost of your program, your rights as a consumer, and the fact that you are still responsible for your debts and may receive collection calls.

Companies legally cannot charge upfront fees for services and must provide an upfront estimate of how long your program will take. Also, they should never put pressure on you to disclose personal information, such as your bank information, before you enroll in their program.

Finally, consolidation companies cannot promise to stop collection calls. Collection agencies are within their legal rights to contact you. While your debt consolidation company may attempt to reduce the number of calls you receive, they might not stop, especially if you stop making your payments to your creditors as part of the program.

What is credit counseling & how can it help?

Depending on the amount or type of debt you have, you might be referred to a credit counselor. Most of the debt consolidation companies we reviewed refer you to a credit counseling firm if you have around $7,500 or less in unsecured debt such as credit cards and personal loans.

Credit counseling usually entails two things. The first is a call with a certified counselor. During this call, you go over your expenses, income and savings, and they help you create a budget. They can also point you to resources for getting credit reports. Credit counselors can also recommend ways to manage your debt – for example through bankruptcy, debt settlement or debt management plans managed by the credit counseling agency.

If credit counseling sounds like something that could help you, check out the National Foundation for Credit Counseling’s list of accredited organizations.

Can you consolidate medical debt?

With medical costs rising, more and more Americans are incurring debt to pay their bills. The average household spends more than $4,600 a year on medical care. According to the CFPB, one in five credit reports has a late medical bill that has been sent to collections. Like all debt, medical debt can be consolidated in a variety of ways.

One way to consolidate or eliminate your medical debt is to negotiate with your creditor. Medical bills often contain errors, so when you get one, review it to make sure it's accurate. If something is wrong, contact your insurance company and the provider’s billing department to get it corrected. You can also apply for financial hardship, especially at a hospital, which can help reduce the amount you pay.

Common ways of consolidating consumer debt also apply to medical debt. You can get a 0% balance transfer card, a personal loan or a home equity loan. All of these depend in part on you having good credit, which may not be the case if you’ve missed any payments on your medical debt. However, if you’re still making payments and have good credit but want some flexibility and relief, these may be good options.

Working with a debt settlement company is another option. You’ll stop making payments on your bill and instead put the money into a fund the settlement company will use to negotiate with your creditors. This option can damage your credit since you don’t make payments while the negotiations proceed.

Are balance transfer cards a good option?

If you’ve got multiple credit cards, personal loans or student loans and worry about struggling with the payments, consolidating the balances onto a single card may be a good option to help you better manage those payments.

With a balance transfer card, you’ll move your existing balances onto just one card. This doesn’t pay them off, it just moves them to one card with one interest rate. Typically these cards offer introductory APRs of 0% for several months; this is a good way to get a leg up on your payments and avoid getting hit with additional interest.

When looking for a good balance transfer card, keep your eyes out for a few things. First, there may be a fee to transfer your balance. This can be between 3% and 5% of your existing balance. So if you transfer $10,000, you’ll pay between $300 and $500. This is less than the fee you’d pay with a debt settlement company, who typically charge between 15% and 25% on debt they settle. Some balance transfer cards don’t have transfer fees, so keep an eye out for those.

Another thing to keep in mind is that some cards will only let you transfer a certain percentage of that card’s credit limit. You’ll also need to factor fees into that amount. So if you have a balance transfer card with a limit of  $10,000, but you are only allowed to transfer 75% of the limit, you’ll only be able to transfer $7,500. And that could leave you with a remaining balance on one of your other accounts.

Typically, you’ll need a high credit score to be eligible for a balance transfer card. Applying for one will result in a hard inquiry, which will affect your score. Generally, if you’ve fallen behind on your current payments, you may need to look for other avenues for debt reduction, since you’ll likely not be eligible for a balance transfer card.

Student loan consolidation

Student loans are one of the most common types of debt in the U.S., making up $1.5 trillion of the population’s debt load. The average student owes around $37,000, and average monthly payments are around $330. Though the federal government is the biggest lender, private lenders account for around 20 percent of the total student loan volume. If student loan debt becomes hard to manage, refinancing and consolidation are two ways to make payments more manageable.

How you consolidate your debt depends on if you have federal loans, private loans or a combination of both. If you only have federal loans, you can apply for consolidation through the Department of Education. Consolidating your federal student loans is similar to consolidating other loans. You won’t get a lower rate, though you can convert variable rate loans to a fixed rate. The primary benefit of consolidating your federal loans is they are combined into a single package and you have just one monthly payment. You can also get a new term, often up to 30 years. The rate for your consolidated loan is the average of your loans’ current rates, rounded to the nearest eighth of a percent.

If you have private loans or a combination of private and federal loans, you can apply to consolidate them through another lender. There are stricter application requirements. For example, you need to have a source of income and good credit – if not, you may need to find a co-signer. When you consolidate your loans through a private lender, you can typically get a lower rate and longer term.

However, private consolidation has some drawbacks. Because it has more requirements, especially regarding your credit, it can be difficult to get approved. And if you are approved, you may not get the best rate. Terms are also shorter, typically 20 years as opposed to 30 years for a federal consolidation. In addition, you waive some fringe benefits – for example, forbearance in case you lose your job.

Can you use your home’s equity to consolidate debt?

If you’ve owned your home for a while and have built up substantial equity, you may be able to tap into that equity as a way to consolidate the medical and credit card debt you’re struggling with. Getting a home equity loan has some advantages over other methods of debt consolidation.

With a home equity loan, you tap into the equity you’ve built up over the years of paying off your mortgage. Home equity loans typically have much lower rates than debt consolidation loans or balance transfer credit cards. The average rate as of February 2018 is around 5.95%, while the best rate for a debt consolidation loan starts at around 13%. And even if you don’t qualify for the best rates, by combining multiple interest-charging accounts into one loan, you’ll still save money.

Another advantage of a home equity loan is lenders typically have less strenuous credit requirements for approval. With a debt consolidation loan, you need a score of around 720 to get a good rate, and a score lower than 680 makes approval unlikely. You can get a home equity loan with a score of around 620, and your credit score contributes less to the decision than for other loans. Lenders also look at your debt-to-income ratio and other aspects of your financial history.

However, there are some disadvantages of getting a home equity loan and using it for debt consolidation. For example, the process for getting one can be time consuming – you need to get an appraisal and go through an underwriting process similar to the one for your first mortgage. This can take upward of a month in some cases. Typically, a debt consolidation or personal loan has a shorter approval process.