Debt Consolidation Loans: Rates, Options & Guide
Explore consolidation loan options, compare rates by credit score, and discover the best way to combine high-interest debt into one manageable payment.
By Loretta Kilday • Reviewed by the DebtCC Editorial Team
Debt Relief Specialist & Spokesperson
KEY TAKEAWAYS
- A debt consolidation loan combines multiple high-interest debts into one single, fixed monthly payment.
- Securing an APR lower than your existing card average reduces monthly interest charges and total payoff costs.
- Rates depend heavily on credit score, with excellent credit scores (720+) qualifying for 13%-17% APRs.
- Choosing the right option—unsecured loan, balance transfer card, or home equity—depends on your credit score and financial assets.
Understanding Debt Consolidation Loans
A debt consolidation loan is a personal loan taken out specifically to pay off multiple credit cards, medical bills, or high-interest balances. Instead of making multiple payments every month to different lenders, you make a single fixed payment to your consolidation lender.
The key to successful loan consolidation is obtaining an interest rate lower than the average interest rate across your current debts.
Loan Types & Options
Select a loan option below to review benefits and drawbacks:
💳 Consolidation Loans
Combine multiple debts into one fixed installment payment
✓ Key Benefits
- Fixed APR and predictable monthly payment
- Single bill paid to one lender
- Significantly lower interest than high-rate cards
- Stress-free organized payoff timeline
✕ Potential Drawbacks
- Potential origination fees (1%-7%)
- Hard credit inquiry required
- Requires credit score 600+ for best rates
6 Steps to Consolidate Debt
Follow this 6-step process to secure a consolidation loan and become debt-free:
Check Your Credit
Review your credit score and pull reports to identify which debts to consolidate.
Calculate Debt Total
Add up all outstanding credit card and loan balances to determine loan size.
Compare Rate Offers
Get prequalified with multiple lenders to compare APRs without affecting credit.
Select Best Loan APR
Choose a loan rate significantly lower than your current credit card APRs.
Apply & Receive Funds
Submit full application and documentation to receive loan funds into your account.
Pay Off Existing Debts
Use loan proceeds to pay off credit cards in full, then focus on single loan payment.
Average Consolidation Rates by Credit Score
Estimated annual percentage rates (APRs) based on credit score tiers and loan repayment terms:
| Credit Score Tier | 24 Months | 36 Months | 48 Months |
|---|---|---|---|
| 720+ (Excellent) | 17.08% | 15.69% | 13.35% |
| 680 - 719 (Good) | 22.97% | 21.49% | 20.50% |
| 660 - 679 (Fair) | 26.94% | 24.65% | 24.68% |
| 640 - 659 (Below Avg) | 30.23% | 26.53% | 26.55% |
| 620 - 639 (Challenged) | 35.59% | 28.15% | 29.44% |
* Estimated benchmark APR averages. Actual rates vary based on debt-to-income ratio, income history, and lender criteria.
Ready to check your consolidation rates?
Our specialists can review your credit score and debt load to connect you with top-rated lenders offering low consolidation APRs.
Call/Text: (800) 332-8913 or request a Free Consultation.
Frequently Asked Questions
Clear answers to common questions about debt consolidation loans:
Loretta Kilday
Debt Relief Specialist & Spokesperson, DebtCC
Loretta Kilday, Esq., is an accomplished litigator and transactional attorney with more than 30 years of experience across debt collection, bankruptcy, and related financial matters. DebtConsolidationCare features her as its spokesperson and public voice. She earned her J.D. from DePaul University College of Law and a B.S. in Finance from DePaul University.
- Loretta Kilday
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