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Debt Consolidation Loans for Bad Credit June 2024

Consolidating your debts can be a game-changer for your financial well-being. By merging multiple debts into one manageable loan, you not only reduce your monthly payments but also gain better control over your finances. This approach helps sidestep late fees and could be the key to faster debt resolution.

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Key Facts

  • 5K Funds makes it easy to get rates and start comparing terms from multiple lenders.
  • 5K Funds has an extensive network of reputable lenders.
  • Borrowers have the freedom to use a personal loan in a number of ways.

Pros

pros iconQuick & simple online application

pros iconAn extensive network of lenders

pros iconUse your loan for any purpose

Cons

cons iconNot BBB Accredited; F rating on BBB

cons iconLoans may contain origination fees

cons iconHighly thorough initial application

5K Funds.com (the “website”) is not an offer or solicitation to lend. The website only provides a service. It is not an agent, representative, or broker of any lender and does not endorse or charge you for any loan or product. The website operators are not lenders, do not make loans of any type, and do not make credit decisions.
The website collects personal information provided by you and forwards it to partners in our lender network. You are not obligated to use this website or service to initiate, contact, or apply for credit or any loan product with any service provider or lender.
Loan amounts vary from $500 and $35,000, but not all lenders can provide up to $35,000. Providing your information on the website does not guarantee you will be approved for a loan or credit product. Cash transfer times may vary between lenders and may depend on your individual financial institution.
In some circumstances faxing may be required. If you have questions, contact your lender directly for details, questions, or concerns regarding your loan or credit product. Short-term cash loans provide short-term financing to solve immediate cash needs and should not be considered a long-term solution.
This service and lenders are not available in all states. Lenders may perform credit checks with the three credit reporting bureaus: Experian, Equifax, or Trans Union or may perform alternative credit checks or consumer reports through alternative providers.
By submitting your request, you acknowledge, agree, and authorize that your information may be sent to lenders or third-party partners on your behalf. Also, such lenders may obtain consumer reports and related information about you from one or more consumer reporting agencies, such as TransUnion, Experian, and Equifax, to evaluate your creditworthiness.

Loan Example: If you borrowed $2,000 over a 12 month period and the loan had a 3% origination fee ($60), your monthly repayments would be $189.12, with a total payback amount of $2269.44 which including the 3% fee paid from the loan amount, would have a total cost of $329.44. Representative 29.82% APR. If you borrowed $5,000 over a 48 month period and the loan had an 8% origination fee ($400), your monthly repayments would be $131.67, with a total payback amount of $6320.12 which including the 8% fee paid from the loan amount, would have a total cost of $1720.12.

 

  • $500-$35K Loan Amount
  • 500 Min Credit
  • 5.99-35.99% APR
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Key Facts

  • APR: Varies by lender
  • Loan Term: Varies by lender
  • Min Credit Score: 300
  • Max Loan Amount: $40K

Pros

pros iconFunds direct deposited often within a single business day

pros iconAbility to compare a range of different options

pros iconHelps people with bad credit to get a loan

pros iconGood range of possible loan amounts

Cons

cons iconAPRs can be high

cons iconNot too much info about lenders

THE OPERATOR OF THIS WEBSITE IS NOT A LENDER, does not broker loans to lenders and/or lending partners and does not make cash advances or credit decisions. This Website does not constitute an offer or solicitation to lend. The operator of this Website is not an agent, representative or broker of any lender and/or lending partner and does not endorse or charge you for any service or product, but may receive compensation from the lender and/or lending partner for forwarding your information to them. In some cases, you may be given the option of obtaining a loan from a tribal lender and/or lending partner. Tribal lenders and/or lending partners are subject to tribal and certain federal laws while being immune from state law including usury caps. If you are connected to a tribal lender and/or lending partner, please understand that the rates and fees may be higher than state-licensed lenders and/or lending partners and you may be required to agree to resolve any disputes in a tribal jurisdiction. Additionally, your information may be going to an aggregator and not a lender and/or lending partner. Your information can be sold multiple times leading to multiple offers from lenders and/or lending partners, and other marketers. Lenders and/or lending partners who buy your information may supplement it with additional information about you that they obtain from other sources. Not all lenders and/or lending partners can provide your requested type of loan and/or loan rate or terms, and we make no promises that you will be able to obtain a loan. Cash transfer times may vary by lenders and/or lending partners and local laws. Lenders and/or lending partners may perform a credit check to determine your creditworthiness. In some circumstances faxing may be required. For details, questions or concerns regarding your cash advance, please contact your lender and/or lending partner directly. Lenders and/or lending partners are solely responsible to you for all aspects of any loan request or loan transaction, including compliance with all applicable laws and regulations relating to your loan request form and any agreement or disclosures relating to your loan request form or loan transaction (including any adverse action notices or Truth-in-Lending Act disclosures). If you are not connected with a lender you may be connected with other financial service providers that offer products associated with your selected loan purpose. Residents of Connecticut, New Hampshire, Washington, and Vermont are not eligible to submit a request for a cash advance on this Website. This service is not available in all states, and the states serviced by this Website may change from time to time and without notice. Short-term loans are an expensive form of credit and not a long-term financial solution. Please use short-term loans responsibly. Loan Example: A $10,000 loan with a 5-year term at 13% Annual Percentage Rate (APR) would be repayable in 60 monthly installments of $228 each. The actual payment amount and year-end balance will vary based on the APR, loan amount, and term selected. In this case the total amount expected to pay by the borrower will be $13,680
Online Lenders Alliance: When you see the OLA seal, you can trust you’re working with a company committed to the highest standards of conduct dedicated to ensuring the best possible experience for their customers, fully compliant with federal law, and working hard to protect consumers from fraud.
© Copyright 2011 – 2023. Lending For Bad Credit. All Rights Reserved. All trademarks, service marks, trade names, product names and logos appearing on the site are the property of their respective owners. Any rights not expressly granted herein are reserved. 

  • $100-$40K Loan Amount
  • 300 Min Credit
  • 6.99-35.99% APR
Powered by Credible
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Key Facts

  • Flexible repayment options
  • Great for customers with bad credit score
  • Safe and secure

Pros

pros iconEasy, fast application process

pros iconFunds are disbursed quickly

pros iconBuilds personal credit

Cons

cons iconHigh fees and interest charges

cons iconNo co-signed, joint, or secured loan option

cons iconNo rate discount for automatic payments

Loan Example: A $10,000 loan with a 5-year term at 13% Annual Percentage Rate (APR) would be repayable in 60 monthly installments of $228 each. The actual payment amount and year-end balance will vary based on the APR, loan amount, and term selected. In this case the total amount expected to pay by the borrower will be $13,680

  • $2K-$35K Loan Amount
  • 580 Min Credit
  • 9.95-35.99% APR
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Key Facts

  • A free, secured loan request process
  • Personal loans up to $20,000
  • Borrowers of any background may qualify

Pros

pros iconUnsecured personal loans ranging from $100 to $20,000

pros iconLenders may work with borrowers with limited or poor credit and income

pros iconMember of the Online Lenders Alliance (OLA)

pros iconReceive funds in as little as one business day

Cons

cons iconExact loan terms, rates, and requirements aren’t available until you apply with a direct lender

cons iconVery few reviews on trusted sites like BBB or Trustpilot

cons iconLimited customer service options

THE OPERATOR OF THIS WEBSITE is a for-profit advertising network. We receive compensation, in the form of referral fees, from lenders, aggregators, credit repair services, or other offers that we direct you to. Therefore, the amount of compensation provided, along with other factors, may impact which offer you are presented. The offer you receive may be coming from the company that bid the most for your information. The operator of this website does not always provide you with an offer with the best rates or terms. Our website does not include all companies or all available offers. We encourage you to research all available loans options for your situation.

* The operator of this website does not broker loans to lenders and does not make cash advances or credit decisions. This Website does not constitute an offer or solicitation to lend. This site will submit the information you provide to a lender. In some cases, you may be given the option of obtaining a loan from a tribal lender. Tribal lenders are subject to tribal and certain federal laws while being immune from state law including usury caps. If you are connected to a tribal lender, please understand that the rates and fees may be higher than state-licensed lenders and you may be required to agree to resolve any disputes in a tribal jurisdiction. Additionally, your information may be going to an aggregator and not a lender. Your information can be sold multiple times leading to multiple offers from lenders, aggregators, and other marketers. Providing your information on this Website does not guarantee that you will be approved for a cash advance. The operator of this Website is not an agent, representative or broker of any lender and does not endorse or charge you for any service or product. Not all lenders can provide up to $20,000. Cash transfer times may vary between lenders and may depend on your individual financial institution. In some circumstances faxing may be required. This service is not available in all states, and the states serviced by this Website may change from time to time and without notice. For details, questions or concerns regarding your cash advance, please contact your lender directly. Cash advances are meant to provide you with short term financing to solve immediate cash needs and should not be considered a long term solution. Residents of some states may not be eligible for a cash advance based upon lender requirements.

** Lenders may perform credit checks with the three credit reporting bureaus: Experian, Equifax, or Trans Union. Credit checks or consumer reports through alternative providers may be obtained by some lenders.

ANTI-SPAM POLICY: We strictly prohibit any reference or advertisement of our brand and web site using unsolicited email messages. Violation of this policy will cause partnership termination and further actions permitted by the law. If you feel you have been sent unsolicited messages promoting our brand or website and would like to register a complaint, please refer to our Privacy Policy. We will investigate all complaints and take necessary action.

Loan Example: A $10,000 loan with a 5-year term at 13% Annual Percentage Rate (APR) would be repayable in 60 monthly installments of $228 each. The actual payment amount and year-end balance will vary based on the APR, loan amount, and term selected. In this case the total amount expected to pay by the borrower will be $13,680

  • $100-$20K Loan Amount
  • 580 Min Credit
  • 5.99-35.99% APR
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Key Facts

  • See loan offers from over 100 lenders
  • Loans available for any type of credit
  • Fees depend on specific lender
  • Max Loan Amount: $35K

Pros

pros iconReceive offers from multiple lenders

pros iconLow minimum credit score required

pros iconNo application fee

Cons

cons iconHard credit pull

cons iconMaximum loan amount of $35K

LoansUnder36%.com (the “website”) is not an offer or solicitation to lend. The website only provides a service and is not an agent, representative, or broker of any lender and does not endorse or charge you for any loan or product. The website operators are not lenders, do not make loans of any type, and do not make credit decisions. The website collects personal information provided by you and forwards it to partners in our lender network. You are under no obligation to use this website or service to initiate, contact, nor apply for credit or any loan product with any service provider or lender. Loan amounts vary from $500 and $35,000 but not all lenders can provide up to $35,000. Providing your information on the website does not guarantee you will be approved for a loan or credit product. Cash transfer times may vary between lenders and may depend on your individual financial institution. In some circumstances faxing may be required. If you have any questions, contact your lender directly for details, questions, or concerns regarding your loan or credit product. Short-term cash loans are meant to provide you with short-term financing to solve immediate cash needs and should not be considered a long-term solution. This service and lenders are not available in all states. Lenders may perform credit checks with the three credit reporting bureaus: Experian, Equifax, or Trans Union or may perform alternative credit checks or consumer reports through alternative providers. By submitting your request, you acknowledge, agree, and authorize that (a) your information may be sent to lenders and/or third-party partners on your behalf, and (b) such lenders may obtain consumer reports and related information about you from one or more consumer reporting agencies, such as TransUnion, Experian and Equifax to evaluate your creditworthiness. Representative example: If you borrowed $2,000 over a 12 month period and the loan had a 3% origination fee ($60), your monthly repayments would be $189.12, with a total payback amount of $2269.44 which including the 3% fee paid from the loan amount, would have a total cost of $329.44. Representative 29.82% APR. If you borrowed $5,000 over a 48 month period and the loan had an 8% origination fee ($400), your monthly repayments would be $131.67, with a total payback amount of $6320.12 which including the 8% fee paid from the loan amount, would have a total cost of $1720.12. Representative 18.23% APR. Loan products have a 61-day minimum repayment term. Loan example:.If you borrowed $5,000 over a 48 month period and the loan had an 8% origination fee ($400), your monthly repayments would be $131.67, with a total payback amount of $6320.12.

  • $500-$35K Loan Amount
  • 300 Min Credit
  • 5.99-35.99% APR
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Key Facts

  • Discounts for Upgrade account owners
  • No prepayment fees
  • Fast funding in 1-4 days

Pros

pros iconOffers a small minimum loan amount

pros iconDeals with credit scores of at least 580

pros iconNo early prepayment fee

pros iconQuick time to funding

pros iconSolid mobile app to manage loans

Cons

cons iconCharges origination fee

cons iconLate fees in place

Personal loans made through Upgrade feature Annual Percentage Rates (APRs) of 8.49%-35.99%. All personal loans have a 1.85% to 9.99% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay and paying off a portion of existing debt directly. Loans feature repayment terms of 24 to 84 months. For example, if you receive a $10,000 loan with a 36-month term and a 17.59% APR (which includes a 13.94% yearly interest rate and a 1.85% to 9.99% origination fee), you would receive $9,500 in your account and would have a required monthly payment of $341.48. Over the life of the loan, your payments would total $12,293.46. The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early. Personal loans issued by Upgrade’s bank partners. Information on Upgrade’s lending partners can be found at https://www.upgrade.com/lending-partners/.

Fast Funding Disclosure: *Accept your loan offer and your funds will be sent to your bank or designated account within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes the transaction. From the time of approval, funds sent directly to you should be available within one (1) business day. Funds sent directly to pay off your creditors may take up to 2 weeks to clear, depending on the creditor.

  • $1K-$50K Loan Amount
  • 580 Min Credit
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Key Facts

  • Loans as small as $100.
  • Fast application and funding.
  • Offers good rates.
  • Max Loan Amount: $20K

Pros

pros iconEasy, fast lender matching process

pros iconFunds are disbursed quickly

pros iconCompetitive interest rates for those with good credit

Cons

cons iconDoes not provide service to borrowers

cons iconBank account required

Terms of your loan will vary based on the amount of the loan and the period of time to repay. Other factors may include the state you live in, your source of income, and your repayment history. Please contact your lender directly for questions regarding your loan.
Loan Example: A $3,000 loan with a 14.99% APR that is repayable in 12 monthly installments would have monthly payments of $270.76 to a total of $3,249.13.
APR for good credit typically ranges from 5.99% to 35.99% and generally will have a repayment term of 3 months to 72 months. Loan amounts under $1,000 will have varying APR’s than what is listed in the represented example above. Please contact your lender for more information.

  • $100-$20K Loan Amount
  • 300 Min Credit
  • 5.99-35.99% APR
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Key Facts

  • Borrowers can find a personal loan option that fits their exact needs
  • Offers a comprehensive knowledge hub
  • Simple to use online loan comparison tool

Pros

pros iconDeals with trustworthy lenders

pros iconWide range of personal loans to check out

pros iconEasy to use comparison tool

pros iconMore than four decades of experience

Cons

cons iconNot a direct lender

cons iconNo live chat

Bankrate.com is an independent, advertising-supported publisher and comparison service. Bankrate.com is compensated in exchange for placement of sponsored products and services, or by you clicking on certain links posted on their site. Therefore, this compensation may impact how, where and in what order products appear within listing categories, except where prohibited by law for mortgage, home equity and other home lending products. Other factors, such as proprietary website rules and whether a product is offered in your area or at your self-selected credit score range, can also impact how and where products appear on the Bankrate site. Bankrate strives to provide a wide range of offers, but does not include information about every financial or credit product or service.

Mortgage
Important information about our Mortgage Rate Tables: The above mortgage loan information is provided to, or obtained by, Bankrate. Some lenders provide their mortgage loan terms to Bankrate for advertising purposes and Bankrate receives compensation from those advertisers (our “Advertisers”). Other lenders’ terms are gathered by Bankrate through its own research of available mortgage loan terms and that information is displayed in our rate table for applicable criteria. In the above table, an Advertiser listing can be identified and distinguished from other listings because it includes a “Next” button that can be used to click-through to the Advertiser’s own website or a phone number for the Advertiser.

Availability of Advertised Terms: Each Advertiser is responsible for the accuracy and availability of its own advertised terms. Bankrate cannot guaranty the accuracy or availability of any loan term shown above. However, Bankrate attempts to verify the accuracy and availability of the advertised terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program.

Loan Terms for Bankrate.com Customers: Advertisers may have different loan terms on their own website from those advertised through Bankrate.com. To receive the Bankrate.com rate, you must identify yourself to the Advertiser as a Bankrate.com customer. This will typically be done by phone so you should look for the Advertiser’s phone number when you click-through to their website. In addition, credit unions may require membership.

Loans Above $424,100 May Have Different Loan Terms: If you are seeking a loan for more than $424,100, lenders in certain locations may be able to provide terms that are different from those shown in the table above. You should confirm your terms with the lender for your requested loan amount.

Taxes and Insurance Excluded from Loan Terms: The loan terms (APR and Payment examples) shown above do not include amounts for taxes or insurance premiums. Your monthly payment amount will be greater if taxes and insurance premiums are included.

Consumer Satisfaction: If you have used Bankrate.com and have not received the advertised loan terms or otherwise been dissatisfied with your experience with any Advertiser, we want to hear from you.

Savings
These rates are updated weekly. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site, where you can find additional information. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration. Bankrate.com rates banks, thrifts and credit unions through proprietary Safe & Sound star rating system. Rates are subject to change without notice and may vary from branch to branch.

Home Equity
These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own website, where you can find additional information. Rates are subject to change without notice and may vary from branch to branch.

Personal Loans
Many lenders have different rates on their own Websites than those posted on Bankrate.com. In order to get the Bankrate.com rate, please identify yourself as a Bankrate.com customer. The rates above were collected by Bankrate.com on the dates specified. Rates are subject to change without notice and may vary from branch to branch. Rate/APR and terms may vary based on the creditworthiness of the individual and the extent to which the loan differs from the one used for Bankrate.com quotes. These quotes are from banks, thrifts, and brokers, some of whom have paid for a link to their own Web site, where you can find additional information.

Student Loans
These rates are updated weekly. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site, where you can find additional information. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration. Bankrate.com rates banks, thrifts and credit unions through proprietary Safe & Sound star rating system. Rates are subject to change without notice and may vary from branch to branch.

Auto Loans
These rates are updated weekly. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site, where you can find additional information. Bankrate.com rates banks, thrifts and credit unions through proprietary Safe & Sound star rating system. Rates are subject to change without notice and may vary from branch to branch.

  • $1K-$100K Loan Amount

Top Debt Consolidation For Bad Credit Providers 

500

Min Credit Score

$500

Minimum Debt Amount

$500-$35K

Loan Amount

5.99-35.99%

APR. Fixed Rate

60 days to 6 years

Repayment terms

No

Soft Credit Pull

Marketplace

Lender Type

N/A

Other Fees

Varies

Origination Fee

Varies

Prepayment Fee

24

Funding Time

Pros & Cons

drop-down-btn
  • con-icon Quick way to compare debt consolidation loans across up to 100 loan providers
  • con-icon Wide range of repayment terms and APRs available
  • con-icon Debt consolidation loans provided are unsecured
  • con-icon Application has a hard credit pull which may harm your credit score
  • con-icon No visibility of specific lenders until after application process
  • con-icon Large level of personal information required at the initial application

Debt Relief Product Types

drop-down-btn
  • Debt consolidation loans
Freedom Logo (Achieve)
Freedom

Free, no-risk credit card debt relief consultation

None

Min Credit Score

$25K

Minimum Debt Amount

Yes

Soft Credit Pull

Marketplace

Lender Type

Yes

Other Fees

None

Origination Fee

None

Prepayment Fee

Pros & Cons

drop-down-btn
  • con-icon Could help reduce the total debt owed
  • con-icon Willing to work with people who have been turned away or rejected by most other lenders or debt consolidation companies
  • con-icon Offers consumers more control over their current debt than making recurring minimum payments and increasing overall debt
  • con-icon Though debt can be lowered, the service itself does have a fee associated
  • con-icon Enrolling on to this program will lower your credit score

Debt Relief Product Types

drop-down-btn
  • Debt relief consultation service
accredited
Accredited

Reduce Your Monthly Payments by 40% or More

$20K

Minimum Debt Amount

Min $10K

Loan Amount

24-48 months

Repayment terms

Yes

Soft Credit Pull

Marketplace

Lender Type

Yes

Other Fees

Varies

Origination Fee

Varies

Prepayment Fee

Pros & Cons

drop-down-btn
  • con-icon Free debt consultation
  • con-icon Consolidation Specialists assigned to your program
  • con-icon Established debt consolidation experts
  • con-icon No credit score minimum
  • con-icon No upfront fees; fees are success based
  • con-icon Best for people with $20,000+ in unsecured debt
  • con-icon Using debt consolidation services can negatively affect your credit score

Debt Relief Product Types

drop-down-btn
  • Debt relief consultation service

How Does Debt Consolidation For Bad Credit Work?

Debt consolidation is a financial strategy where multiple debts are combined into a single loan with a lower interest rate or lower monthly payment. If you have bad credit, a debt consolidation loan could help. Some lenders offer personal loans specifically to borrowers with limited credit history or poor credit. This makes it a solid option for people who need a loan to consolidate their debt.

Oftentimes, the interest rate on a debt consolidation loan would be lower than what you pay on your individual accounts. If it is lower, you could save money on interest charges over time. You might also be able to reduce your monthly payment amount. Make your payments on time, and this kind of loan can help you avoid penalties and eventually resolve your numerous debts.

By getting a debt consolidation loan, you can streamline your monthly payments. Instead of paying several accounts every month, you’ll only need to pay one loan. Having only one monthly due date makes it harder to miss payments or incur late fees. This can also help if you have a history of missed payments and are trying to rebuild your credit score.

Who is Debt Consolidation Good For?

Debt consolidation is generally best for borrowers with a lot of high-interest debts or debts with variable annual percentage rates (APRs). You can use a debt consolidation loan for things like credit cards, medical bills, and payday loans.

Some banks, credit unions, and online lenders offer debt consolidation loans to people with bad credit. If you have a steady income and a lower debt-to-income ratio, you may have a higher chance of getting a loan with decent rates.

Here’s what’s generally considered bad credit:

  • FICO (used by 90% of lenders) — 300 to 579
  • Experian — 300 to 579
  • Equifax — 280 to 559
  • TransUnion — 300 to 600

Loan Calculator for Bad Credit

Loan amount

$

Term in months

ui_calender

Interest rate per year

%

$853.79

Monthly payment


$10,245.42

Total paid

$245.42

Interest paid

How to Get a Debt Consolidation Loan for Bad Credit

If you’ve weighed the pros and cons of debt consolidation and are still interested in applying for a loan, here’s how to do it:

  1. Check your credit. Get a free copy of your credit report and review it. There might be ways to improve your score before applying for a loan. This could get you more competitive interest rates.
  2. Compare lenders. Shop around until you find the lender with the best rates and terms. You may be able to prequalify to see your potential rates without affecting your credit score.
  3. Apply online. You can typically apply for a debt consolidation loan online. This might affect your credit score.
  4. Wait for the decision. The lender will review your information and approve or deny your application.
  5. Receive funds. If approved, you’ll usually receive the money within a couple of business days (depending on the lender). You can then use the funds to consolidate your debts.
  6. Start making payments. Make on-time payments on your new loan until it’s paid off.

Debt Consolidation Loans: What to Consider

Every loan — including debt consolidation loans — comes with its benefits and drawbacks. Make sure you consider these before applying for one.

Here are the main advantages of debt consolidation loans for bad credit:

  • Having one monthly payment makes it easier to make on-time payments.
  • It could help you build your credit score.
  • Makes it easier to keep track of your debt.
  • Your monthly payment amount could be lower than your original debts, especially if you get a lower overall interest rate.
  • These loans come with a fixed repayment schedule.

And here are the main drawbacks:

  • Debt consolidation makes your outstanding debts more manageable, but it doesn’t get rid of them.
  • If you take out a loan that’s bigger than you need, you could end up in more debt than you originally had.
  • Some lenders charge additional fees or require you to have a minimum debt amount.
  • Bad credit could mean higher APR and limited options.

Pros and Cons of Debt Consolidation Loans

Thinking about a debt consolidation loan for bad credit? Here are the main advantages and disadvantages.

Pros of Debt Consolidation Loans for Bad Credit

  • Could save you money on interest payments over time
  • May be easier to qualify for than other debt consolidation loans
  • Having one loan with a fixed monthly payment can make it easier to pay down debt
  • Loan terms may be flexible
  • Can potentially reduce monthly payments, simplify the repayment process, and improve credit scores over time.

Cons of Debt Consolidation Loans for Bad Credit

  • Loan amounts may be lower for bad credit borrowers
  • Higher interest rate than loans for good credit borrowers
  • Not all lenders offer these loans

Other Debt Consolidation for Bad Credit Options

There are several ways to consolidate debt — even if you have bad credit. These include:

  • Personal loan: A personal loan can be used for nearly anything, including debt consolidation. These loans typically have a set repayment term of 12 to 60 months. They also have a fixed monthly payment and interest rate. Loan amounts range from a few hundred dollars to over $100,000. Your credit score will determine your loan amount, rate, and terms.
  • Balance transfer credit card: A balance transfer lets you move your existing credit card balance to a new card — usually for a small fee. Some balance transfer cards have a 0% introductory rate for around six to 21 months. This means the card won’t incur interest during this time. If you pay off the full balance before the introductory period ends, you could save hundreds or thousands of dollars in interest. You may need fair or better credit to qualify.
  • 401(k) loan: If you have a 401(k) retirement plan, you might be able to take out a loan using the funds in your account. The maximum loan amount is $50,000 or 50% of your balance, whichever is lower. You don’t need good credit for this option.
  • Home equity loan: If you’re a homeowner, you may qualify for a home equity loan. These loans use your home equity as collateral. This means you could lose your property if you don’t pay back what you owe. You may be able to borrow up to 80% of your equity. You can use this money for things like home improvements or debt consolidation.
  • Debt settlement: Debt settlement involves working with your creditors to reduce what you owe. This process comes with some risks and can damage your credit score. But it can also make it easier to pay down your debts over time.

Should You Get a Debt Consolidation Loan?

A debt consolidation loan might be a good idea if you:

  • Want to pay down your debts faster
  • Struggle to keep up with multiple monthly payments
  • Want to reduce how much you pay in interest
  • Are trying to improve your credit score
  • Want to reduce financial stress

How to Apply For a Bad Credit Debt Consolidation Loan

Before you apply, add up your existing debts to see how much you need to borrow. You can use a debt consolidation calculator to estimate your monthly payments on the new loan. This will help you determine whether you can afford the loan — and if it’s the best option for you.

Different lenders might have additional fees, such as origination or prepayment fees. They might also require you to have a minimum — or maximum — amount of debt to consolidate.

Compare offers and eligibility requirements from multiple lenders, too. This can help you find the best rates and terms. Typical eligibility criteria include:

  • Steady income
  • Minimum credit score
  • Maximum 40% debt-to-income ratio (excluding mortgages)
  • 18+ years old

Average Debt Consolidation Loan Rates

The interest rate on a debt consolidation loan is mostly based on your credit score. If you have bad credit, you can generally expect a higher interest rate. Here are a few debt consolidation loan lenders and their minimum and maximum APRs:

Lender APR (Fixed) Minimum Credit Score
Bankrate 6.24% to 35.99% 550
5kFunds 5.99% to 35.99% None
LendingTree 5.99% to 35.93% 550
LoansUnder36 5.99% to 35.99% 550
Lending For Bad Credit 6.99% to 35.99% None

The Bottom Line

A debt consolidation loan tailored for bad credit holders offers a viable path toward financial stability. By simplifying your monthly payments and potentially lowering interest rates, it empowers you to take charge of your debt. Remember to explore various lenders, compare rates, and assess your eligibility. With the right strategy, a debt consolidation loan can be a powerful tool in your journey towards financial freedom.