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7 Best Unsecured Loans to Consolidate Debt

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The best unsecured loans can help you kill debt and save money. Here are the top picks for personal loans for excellent, average or bad credit.

Unsecured loans can be useful when it comes to eliminating your debt. While the best unsecured personal loans vary, they all help you pay off debt faster. When you get out of debt fast, it helps you achieve financial freedom and live the life you want.

You may not know where to go to find low-interest personal loans. There are numerous choices to consider. This post will help you determine the best unsecured loans for your specific needs.

Best Unsecured Loans

 

The best online loan companies may charge fewer fees and offer better rates than local banks. Comparing rates online is quick, easy, and doesn’t hurt your credit score.

These lenders provide personal loans that don’t require collateral, have competitive rates, and won’t charge hidden fees.

SofiCredibleLightstream
sofi personal loanscredible personal loansLightstream personal loan

APR
5.99 - 19.16%

APR
4.99 - 35.99%

APR
5.95 - 19.99%

Min. Credit Score
680+

Min. Credit Score
580

Min. Credit Score
660

Loan Amt.
$5,000 - $100,000

Loan Amt.
$1,000 - $100,000

Loan Amt.
$5,000 - $100,000

Check Rates

Check Rates

Check Rates

 

1. SoFi

 

SoFi is one of the most exciting lenders because they have additional benefits most banks don’t offer. For example, you can open a free online checking account and get credit score monitoring.

Another benefit is SoFi’s unemployment protection when you’re not at fault for losing your job. SoFi pauses your monthly payment for up to three months and helps you look for a new job.

Your rate quote from Sofi might differ from other lenders because SoFi doesn’t require a minimum credit score. While a score in the high 600s is helpful, SoFi evaluates your employment history, income, and current monthly expenses to see if you qualify.

SoFi loans are currently unavailable in Mississippi. You can also use SoFi to refinance student loans to save more on monthly loan costs.

Read our Sofi personal loans review to learn more. 

APR: 5.99 percent to 19.16 percent (with .25 percent auto-pay discount)

Repayment terms: Two to seven years

Loan amount: $5,000 to $100,000

Additional fees: None

Minimum credit score: Undisclosed (680+ for the best approval odds)

Check Rates

 

2. Credible

 

Credible is one of the fastest options to compare personal loan quotes. This loan search engine gives you rate quotes from multiple lenders in just two minutes with a single search. You receive the same rate quote you’d get if you visited each lender website to pre-qualify.

While Credible doesn’t charge any fees, some personal loan companies may charge origination fees. You will see a breakdown of the potential fees, interest rate, and total loan costs on the comparison screen.

There is no obligation to apply for a loan with Credible. You can apply with another lender if they offer a better rate.

Once you decide which loan company has the best rate, you finish the application on the lender’s website. You may appreciate Credible if you have fair credit since they partner with lenders for every credit score range.

Credible even lets you compare rates if you add a co-signer when you have poor or no credit.

You can read our review of Credible to see how you can use them to find the best student loan refinance rates.

APR: 3.49 percent to 35.99 percent

Repayment terms: One to seven years

Loan amount: $1,000 to $100,000

Additional fees: Some lenders have origination fees up to 8.00 percent

Minimum credit score: 580

Check Rates

 

3. LightStream

 

If you have excellent credit and need an unsecured loan, LightStream is worth considering. A division of SunTrust Bank, Lightstream offers online loans as low as 5.95 percent. However, it’s somewhat difficult to secure that particular rate.

The entire LightStream loan process takes place online. You can potentially receive funds the same day. Unlike other lenders or local banks, you won’t pay origination fees.

While LightStream does not look for a specific credit score, good to excellent credit is preferred. Similar to other loan companies, your credit history, income history, payment history, and current assets influence your rate quote.

The loan purpose, repayment term, and loan amount also determine your minimum APR.

Enrolling in AutoPay reduces the interest rate on a Lightstream debt consolidation loan by .50 percent.

APR: 5.95 percent to 19.99 percent (with .50 percent AutoPay discount)

Repayment terms: Two to seven years

Loan amount: $5,000 to $100,000

Additional fees: None

Minimum credit score: 660

Check Rates

 

4. Payoff

 

Do you have credit card debt, no current delinquencies, and good credit? If so, the best unsecured loan option for you might be Payoff. A Payoff Loan lets you refinance up to $40,000 in credit card balances.

You receive free monthly FICO credit score updates when you use Payoff.

*Related: Need to rebuild your credit? Check out our guide on credit builder loans to see if they’re a viable alternative.*

Payoff personal loans are only for paying off credit card debt.

The second difference is that Payoff assigns you a member advocate. This advocate is your resource whenever you have needs, questions, or concerns. Your advocate checks in each quarter to see if you have any money questions.

You can qualify for a Payoff loan with a FICO score of at least 640, a debt-to-income (DTI) of less than 50 percent, and at least three years of credit history.

Payoff loans are currently available everywhere except Massachusetts, Mississippi, Nebraska, and Nevada.

APR: 5.99 percent to 24.99 percent

Repayment terms: Two to five years

Loan amount: $5,000 to $40,000

Additional fees: Origination fee up to five percent

Minimum credit score: 640

Check Rates

 

5. Avant

 

Having a low credit score doesn’t mean you can’t get an unsecured personal loan. It does mean Avant might be your best option because you might qualify with a score as low as 580.

You can receive loan amounts of up to $35,000. While this limit is lower than other lenders, it can be enough to consolidate your high-interest debt. However, most lenders only offer larger loans to those with the best credit scores.

Avant sets itself apart by giving funds as soon as the next business day. Other lenders may take up to a week to disburse your loan amount.

Since Avant caters to low credit scores, borrowers with high credit scores can qualify for better rates at another lender. You can compare multiple lenders at Credible to save time and money.

Avant is not available in Iowa or West Virginia. Also, payments at least ten days late incur a $25 fee.

APR: 9.95 percent to 35.99 percent

Repayment terms: Two to five years

Loan amount: $2,000 to $35,000

Additional fees: Origination fee up 4.75 percent

Minimum credit score: 580

Check Rates

 

6. Fiona by Even Financial

 

Fiona by Even Financial is another free loan comparison site that lets you evaluate rates for online loans quickly. You can see rates for up to 17 lenders for free. It’s possible to search results by lender, payment term, interest rate, and estimated monthly payments.

You start the loan search by entering your zip code to find lenders for your state. Like other loan marketplaces, Fiona doesn’t issue any loans. The final loan offer you receive can differ from Fiona’s initial rate quote.

Even if you have bad credit, they can help you find a potential loan offer.

Fiona by Even Financial is available in all 50 states.

APR: 4.99 percent to 35.99 percent

Repayment terms: Two to seven years

Loan amount: $1,000 and $100,000

Additional fees: Origination fee up to six percent with some lenders

Minimum credit score: 580

Check Rates

 

7. LendingClub

 

LendingClub is a big player in the peer-to-peer lending space and offers loans between $1,000 and $40,000. Instead of getting money from an online bank, private investors fund your loan request.

LendingClub personal loans can be a little more difficult to secure, since they take your debt-to-income ratio seriously. However, it can be worth a few minutes to compare their rate to an online bank.

Your minimum repayment term is three years (36 months). There is an origination fee between two and six percent.

LendingClub is one of the few lenders to offer joint loans. You and a co-borrower can apply for one loan if your combined DTI is below 35 percent. Applying together can help you qualify for a better rate.

You can receive your loan funds in as little as four days. This delivery speed can be quicker than local banks that require more paperwork.

APR: 10.68 percent to 35.89 percent

Repayment terms: Three years or five years

Loan amount: $1,000 and $40,000

Additional fees: Origination fee between two and six percent

Minimum credit score: 680

Check your rate at LendingClub to see how much money you can save.

What Is An Unsecured Loan?

 

An unsecured personal loan doesn’t require collateral like a home loan or car loan. Instead, most lenders use your credit score and other credit factors (for example income history or current debt-to-income ratio) to determine your interest rate and loan amount.

Since you don’t need collateral, you usually need good credit to qualify for an unsecured loan. You can qualify for loans with little or no credit history.

However, your interest rate will likely be higher than other loans yet lower than keeping a credit card balance.

Some lenders will accept co-signers and co-borrowers to help you get a lower rate.

Many personal loans with no collateral have fixed monthly payments, making it easy to attack debt. Your interest rate won’t increase and you’ll make the same payment amount each month.

In the case of credit card debt, you likely have a variable interest rate which means different payments each month.

Who Needs Unsecured Personal Loans?

 

Achieving financial freedom should be the sole purpose behind getting an unsecured personal loan.

Personal loans are a good idea when you:

  • Want lower interest rates
  • Need to consolidate debt into one simple payment
  • Aren’t getting loan offers from traditional banks

However, you may want to avoid getting a loan if you plan on using the funds on something frivolous. That will only continue the cycle of debt.

If the loan doesn’t get you closer to financial freedom, look the other way and save for the expense.

A common question is whether or not you need good credit to get the best unsecured loans. A higher credit score can secure you a better rate.

There are also options to consider if you need a personal loan but have bad credit. You will need to shop around to find those options.

Doing your due diligence is vital when it comes to evaluating unsecured loans. Starting with these personal loan companies can save you time and help you avoid shady lenders.

Pros and Cons of Loans to Pay Off Debt

 

Unsecured personal loans can be an effective debt payment strategy. However, they may not make sense if you cannot get a lower rate or have a small debt balance.

Pros

  • Can get a lower interest rate and monthly payment
  • No prepayment penalties
  • Online lenders make it easy to compare rates and total loan costs
  • Combine multiple debts into one payment

Cons

  • Some lenders charge an origination fee
  • May need a minimum 680 credit score to qualify
  • May not qualify for a lower interest rate
  • Most lenders have a minimum $5,000 loan amount

Balance Transfers vs. Loan Consolidation

 

If you have credit card debt, you can also consider a balance transfer card. With either option, the lender performs a hard credit pull to open your new credit line.

When Balance Transfers are Better

 

Most balance transfer offers are between six and eighteen months long. Your remaining balance starts accruing interest when the promotion ends.

You will pay a one-time transfer fee of up to three percent. The good news is that you can make interest-free payments during the introductory period. Despite the upfront fee, your total interest savings can be more than getting a loan.

Transferring your balance might make sense if you can pay off your balance quickly. Also, you should transfer instead of consolidating when the transfer fees are less than your total loan costs.

Another time to consider balance transfers is when you have a small balance. For instance, most personal loans require you to borrow at least $5,000.

Here are some of the best balance transfer cards that can help you save money while paying off debt.

The best reasons to transfer your credit card balance include:

  • Having small amounts of debt
  • Transfer fees are less than consolidation loan costs
  • You can repay the balance during the interest-free period

When Debt Consolidation is Better

 

Debt consolidation is better when you need several years to repay your debt. Most personal loans have repayment terms of at least three years.

Although you pay interest each month, loan interest rates are usually lower than credit cards.

You might consider getting a loan if you want to close a credit card and avoid future debt. Paying off a credit card means you have more spending power. If you carry a new balance, you go deeper into debt.

You can use the loan funds to pay off your credit card. Then you can close your account.

It’s might be best to consolidate your debt instead of doing a balance transfer when:

  • You cannot pay your balance off before the balance transfer promotion ends
  • Total loan costs are less than balance transfer fees and interest charges
  • You want to close your credit card or avoid opening a new account
  • You’d prefer a single monthly payment for credit card and other personal debt

What is the Smartest Way to Consolidate Debt?

 

The best way to consolidate debt is by choosing the option that reduces your total loan costs. You should get several loan quotes to make sure you get the best rate and avoid fees.

There are plenty of loan scams, so always research lenders thoroughly before taking out a loan.

You might consider these factors when comparing personal loans:

  • Low rates – the last thing you want is to pay a high rate. That will extend the life of your loan.
  • Little to no fees – origination fees are difficult to avoid, but it is possible. There are other fees to keep in mind, so be aware of them as they only increase the cost.
  • Transparency – the site should be very clear about what the loan process is like. Their rates should be listed and their process should be communicated thoroughly. This should also be the case in their mailings and when you call their customer service department.
  • Flexibility – not everyone has the same needs. You want to pick a loan provider that’s going to provide flexibility. If they don’t offer this, look elsewhere.
  • Loan limits – this only applies if you need to consolidate a sizable amount of debt. You want to be able to stay with one lender for sake of ease.
  • Watch out for scams – never agree to pay anything upfront or fall for a guarantee. Verify all information provided by the loan company. Run the other way if they aren’t willing to explain everything clearly.

Make extra payments when possible. Repaying your loan early means you pay less total interest. Legitimate lenders won’t charge a prepayment penalty.

Summary

 

If you’re dealing with debt, try to lower your rate and pay it down as soon as possible. Working with a loan company can help you do this. Remember that best loan providers don’t charge hidden fees or high interest rates.

Thankfully, it’s easy to compare rates for unsecured loans online and quickly research your best options. Once you find the right option for you, it will make it much easier for you to get out of debt fast.

 

What has been helpful to you in paying off debt? How much interest are you paying each month on your debt?

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John is the founder of Frugal Rules, a dad, husband and veteran of the financial services industry whose writing has been featured in Forbes, CNBC, Yahoo Finance and more.

Passionate about helping people learn from his mistakes, John shares financial tools and tips to help you enjoy the freedom that comes from living frugally. One of his favorite tools is Personal Capital , which he used to plan for retirement and keep track of his finances in less than 15 minutes each month.

Another one of John's passions is helping people save $80 per month by axing their expensive cable subscriptions and replacing them with more affordable ones, like Hulu with Live TV.

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