Debt Consolidation Loans for Bad Credit in 2024 | LendingTree (2024)

How Does LendingTree Get Paid?

LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.

How Does LendingTree Get Paid?

• One of the lowest credit score requirements on the market
• Can get your money one day after you're approved
• Borrowers can take out up to $50,000

• Only two repayment terms to choose from (36 or 60 months)
• Although you may be approved with bad credit, your rate will probably be high
• Can't take out a loan with a second person

• Can add a second person to your loan
• Peer-to-peer loans can be easier to qualify for
• As long as you're caught up, you may be able to change your due date once a year

• Will keep 1.00% - 9.99% of your loan funds as an origination fee
• Loan request will be canceled if investors don't fund at least 70% of your loan within 14 days
• $15 late fee (or 5% of the unpaid balance, whichever is greater)

• Offers next-day loans
• Can offer your car as collateral to help your approval chances
• Can add a second person to your application

• Keeps between 1.85% - 9.99% out of every loan as an origination fee
• No live chat for application questions
• $10 late payment fee

• Fast funding timeline (as soon as the day after you're approved)
• Lower origination fee compared to other lenders
• Reports to all three credit bureaus

• Might not offer enough money if you have a big amount of debt to consolidate
• Potential for high origination fee
• $25 late payment fee

• Can change your due date one time
• Able to add another person to your loan
• 15-day grace period for payments

• Loan amounts only up to $40,000
• Low mobile app rating from Android users
• All loans get an origination fee of 3.00% - 8.00%

• Can opt to pay creditors directly
• No application or late payment fees
• Consolidation loans specifically geared toward credit card debt

• May need to wait three to six business days for your funds
• Can't add a second person to your loan
• Loans not available in Massachusetts or Nevada

• Funds deposited as soon as next business day
• Long loan repayment terms
• Annual income requirement of only $35,000

• Loans not available in Nevada or West Virginia
• Doesn’t offer joint or cosigned loans
• APR rates can get as high as 35.99%

• Can offer collateral to get a lower rate
• Can get your loan via prepaid debit card
• Physical branches located throughout the country

• Won't work if you have more than $20,000 worth of debt to consolidate
• High origination fees
• High interest rates

If you have bad credit, review these pros and cons before determining if a debt consolidation loan is right for you.

Will the interest rate you receive be worth it? If you have serious credit problems, you’ll likely have trouble qualifying for a decent APR. Compare the interest rates on your existing debts with possible rates for debt consolidation loans. Loan prequalification lets you compare estimated APRs without hurting your credit score.

Do you have a debt payoff plan? Consolidation alone usually isn’t enough to help you achieve freedom from debt. But if you’re willing to follow a plan for how to get out of debt, a consolidation loan could help.

Can you avoid new debt? You don’t want to pay off your current debts with a consolidation loan and start racking up more debt. You’ll need to be 100% committed to avoiding new debt, or consolidation could snowball into a bigger money and credit problem down the road.

How to qualify for a debt consolidation loan if you have bad credit

Unsecured debt consolidation loans aren’t your only option for getting out of debt — here are a few alternatives.

Credit counseling or debt management plan

If you’ve fallen into debt, you could contact a nonprofit credit counseling agency that helps people negotiate with creditors and creates a debt management plan. Debt management plans can simplify your monthly debt payment, much like a consolidation loan does.

Credit counselors often are an affordable option relative to financing your debt, but make sure you find a credit counselor that meets your specific needs. They can also help you create a budget and teach money management skills.

Home equity loan

Sometimes you can find better terms on debt financing if you can take out a secured loan, which uses collateral. With a home equity loan or home equity line of credit (HELOC), you can use your home to finance your new loan — but watch out, because nonpayment could mean foreclosure. Home equity loans tend to have better interest rates than debt consolidation loans.

Other secured loan

Home equity loans are one of many types of secured loans, which include collateral like cars, bank accounts and other valuable items. For debt consolidation, loans financed with cars or funds in a savings or investment account might have more favorable terms — but again, they come with serious risk. For example, failure to make debt payments on an auto title loan might make you lose your car.

401(k) loan

Some companies let you borrow from your 401(k). The interest you pay goes back into your 401(k), but you can only borrow up to half of the vested amount or $50,000 (if the vested amount is higher). You might also have to pay the balance in full if you leave your job.

Balance transfer cards for credit card debt

Financing debt with a balance transfer credit will help you avoid paying further interest in the short-run and could wind up saving you some money. If you’re able to pay off the debt during the introductory period, which lasts between a year or two, you’ll pay 0% APR — but if you carry a balance past that, you’ll have to pay back interest and potential fees.

If you can’t get approved for a debt consolidation loan, there are more strategies for reaching your financial goals.

Debt management strategies

With discipline and a sensible debt payoff plan, you could potentially be able to pay off your existing debt yourself. Create a budget, rein in some expenses and try to use extra money to pay off the debt. Some debt payoff techniques focus on paying off the debt with the highest interest (debt avalanche) or smallest balance (debt snowball).

Improve your credit score

The best way to improve your chances of getting a new loan is to boost your credit score. Improving your score may take time, especially if you have a track record of missed payments, but steady, responsible credit usage can help bring your score back up. Start by making on-time payments, improving your credit utilization ratio or disputing possible errors.

Debt settlement

Debt settlement services will significantly hurt your credit score by encouraging you to miss payments and avoid contacting creditors while the company negotiates with them. While they can reduce your overall debt burden, creditors don’t have to work with them, and even if they do, you’ll still have to pay fees as a percentage of the starting debt.

Bankruptcy

Only to be considered as an option of last resort, bankruptcy is a legal process in which you can discharge certain forms of debt under certain conditions, some of which may allow creditors to repossess assets. Bankruptcies will also damage your credit score and future ability to borrow money.

We reviewed more than 25 lenders that offer personal loans to determine the best debt consolidation lenders for bad credit. To make our list, lenders must offer competitive annual percentage rates (APRs). From there, we prioritize lenders based on the following factors:

• Accessibility: Lenders are ranked higher if their personal loans are available to more people and require fewer conditions. This may include lower credit requirements, wider geographic availability, faster funding and easier and more transparent prequalification and application processes.
• Rates and terms: We prioritize lenders with more competitive fixed rates, fewer fees and greater options for repayment terms, loan amounts and APR discounts.
• Repayment experience: For starters, we consider each lender’s reputation and business practices. We also favor lenders that report to all major credit bureaus, offer reliable customer service and provide any unique perks to customers, like free wealth coaching.

LendingTree reviews and fact-checks our top picks on a monthly basis.