I Want to Consolidate My Loans: A Complete Guide

Finding yourself sinking under mounting monthly loan payments is an increasingly common plight. Loan consolidation offers struggling borrowers a potential lifeline – combining multiple loans into one payment at lower interest can provide much needed breathing room. This comprehensive guide will clarify exactly how to consolidate different loan types while weighing the pros and cons of consolidation loans for credit card debt, student loans, payday loans, medical loans and other common personal debts.


Consolidating loans simply means rolling multiple existing debts into one new consolidated loan, ideally with better terms. This allows repaying everything through single lower monthly payments. Consolidation helps organize unruly accounts while making bills simpler and more affordable. We will examine options for consolidating most common loans and debts along detailing associated fees, eligibility criteria, and processes. Successfully consolidating starts with choosing the right approach for your specific debt situation from numerous available consolidation loan programs and lenders.

Different Types of Debt Suitable for Consolidation

If juggling repayments across multiple loans and accounts has become unmanageable, here are the most common varieties ripe for consolidation:

1. Credit Card Debt Consolidation Loans

Combining high-rate revolving credit card balances to a fixed rate personal loan saves big on interest costs. Banks, credit unions, and specialized lenders help facilitate credit card debt consolidation.

2. Payday Loan Debt Consolidation

Direct lenders refinance crippling payday loan obligations through lower rate personal loans with extended repayment timelines structured for struggling borrowers.

3. Medical Bill Consolidation Loans

Medical loan repayment assistance programs help consolidate hospital bills, doctor fees, and labs into zero-interest or taxpayer-subsidized health care loans. Non-profit lenders lead this space.

4. Federal Student Loan Consolidation

Borrowers combine multiple federal student loans into one Direct Consolidation Loan via the Department of Education carrying a weighted average rate. This helps organize payments with flexible federal repayment options.

5. Auto Loan Refinancing

Refinancing rolls existing auto loan balances into a new loan, ideally at lower interest. Banks and credit unions compete for refi business alongside specialized auto lenders.

Keep reading as we detail the processes, pros and cons, and alternatives routes to facilitate consolidating each major debt category to simplify and de-stress your financial life.

Credit Card Debt Consolidation Loans

The Benefits

Combining multiple high-rate revolving credit card balances into a personal loan carrying lower fixed interest saves enormously on interest paid over the loan term. Consolidating credit cards also helps by:

  • Organizing scattered payments into one monthly bill
  • Paying off balances for a set repayment period
  • Lowering variable APRs to a fixed improved rate
  • Disabling ability to continue charging additional balances
  • Improving credit mix impact on credit scores

What to Look Out For

Watch out for debt consolidation loans packaging expensive upfront fees, prepayment penalties for early payoffs, and bulk interest charges defeating the savings purpose. Safeguard your credit standing by avoiding shady lenders marketing guaranteed approvals alongside opaque loan terms.

Finally, note that any open credit cards NOT included in consolidation remain tempting and available for charging additional debt. Avoid this relapse by canceling excess cards and lines of credit during and after loan consolidation.

Top Lenders to Consider

Leading national banks, credit unions, peer-to-peer lenders, and specialized consolidation loan companies compete to refinance credit card debt at attractive rates. Our top consolidation loan lender picks include:

  • Lightstream – Fixed APRs as low as 5.99%
  • PenFed Credit Union – Credit cards with rates from 6.49%
  • LendingClub – 3 and 5-year repayment terms, rates from 5.99%
  • Marcus by Goldman Sachs – No fees, fixed rates from 6.99% APR
  • Upgrade – Loans from $1,000-$50,000, rates from 6.94%
  • Payoff – Rates as low as 5.99%, 3-5 year terms

Carefully compare all loan terms and borrower reviews before committing. Personalized rate quotes quickly illustrate potential monthly payment and interest savings from consolidating debt with any lender.

Payday Loan Debt Consolidation

The Benefits

Payday lenders entrap borrowers by structuring extreme short-term loans impossible to repay in single lump sums. This breeds endless loan rollovers burying desperate borrowers in spiraling three-digit interest costs. Payday loan consolidation can throw distressed borrowers a lifeline via:

  • Swapping 400%+ APR loans for manageable lower rate terms
  • Aligning reasonable payment timelines matching actual budgets
  • Saving thousands in eliminated rollover fees and interest
  • Rebuilding credit through diligent repayment

Non-profit credit counseling assists with payday loan consolidation applications and finding legitimate affordable repayment relief.

What to Look Out For

Some debt relief companies overpromise with pressure tactics and upfront fees rather than reasonable consolidation terms. Avoid unscrupulous brokers making unrealistic guarantees alongside requests for large enrollment charges.

Legitimate non-profit consolidation helpers will discuss personalized solutions for easing unsecured loan burdens through appropriate debt management or consolidation vehicles.

Top Lenders to Consider

Specialized non-profit lenders and credit counseling agencies design consolidation products catering to severely debt-laden borrowers. Our top recommendations among consolidation charities include:

  • National Debt Relief – Negotiates payday loan settlements and structures debt management plans
  • GreenPath Financial Wellness – Credit counseling guiding loan consolidation options
  • American Consumer Credit Counseling (ACCC) – Debt management assistance

Additionally, some top online lenders like LendingClub do approve select credit card and personal loan consolidation applications submitted by distressed borrowers when criteria is met.

Moving small toxic payday loans into one larger low-rate loan marks major progress rebuilding credit, savings, and financial health over the long run.

Medical Bill Consolidation Loans

The Benefits

Medical issues creating open-ended health care balances and payment plans spread across hospital networks, doctor offices, labs and more wreak havoc on financial fitness. Medical loan consolidation collects all outstanding fees into one predictable fixed monthly payment. Additional benefits include:

  • Lower or zero interest costs compared to essential hospital/doctor bills
  • Fixed monthly dues solidifying variable open-ended medical debts
  • Widened repayment timeline breathing room missing from urgent care invoices
  • One centralized bill rather than chasing multiple providers
  • Non-profit rate subsidies offering deep payment relief

Consolidating medical loan repayments makes life easier for anyone combating health challenges alongside daunting bills.

What to Look Out For

Avoid medical credit cards simply charging higher financing fees without rate relief or lenient repayment terms. Some medical consolidators also neglect clearly disclosing loan acceptance criteria and borrower responsibilities before accepting applications. Requiring upfront payments prior to formally approving applicants hints at predatory consolidation prone to disappoint rather than deliver financial assistance.

Top Lenders to Consider

Specialized medical consolidation loans and assistance programs widely offer struggling patients more realistic ways of meeting care costs. Our top rated medical consolidation loan providers include:

  • Stride Funding – Crowdfunded medical loans
  • Prosper Healthcare Loans – Fixed-rate loans from 5.99% APR
  • United Medical Credit – Offers zero interest plans
  • OneMedicalFinancing – Combines all bills starting at 5.99% APR
  • National Medical Card – Pre-approves costs as future 0% 12- month loans

Legitimate medical consolidation solutions provide fixed rates as low as zero percent alongside predictable terms so patients focus on healing rather than haggling over urgent healthcare and crushing related bills.

Federal Student Loan Consolidation

Federal student loan consolidation simply combines multiple existing federal student loans into one single Direct Consolidation Loan via the Department of Education. This helps organize payments while giving access to income-driven plans and public service forgiveness options.

The Benefits

Consolidating through the federal Direct Loan program delivers unmatched benefits like:

  • Potentially lower monthly payments through income-driven plans
  • Deferment and reduced payment options during financial hardship
  • Public Service Loan Forgiveness eligibility
  • Lump sum payoff capabilities to save on total interest

Federal consolidation also carries some rare potential drawbacks covered below – but remains mandatory for accessing federal repayment assistance programs.

What to Look Out For

The core downside of federal consolidation comes from blending together a mix of higher and lower rate loans. This consolidation process requires averaging out the interest rates into one fixed rate. So consolidating some lower rate debts together with higher rate loans could mean you end up with a blended, higher rate after combining everything.

Doing the math beforehand ensures your new consolidated interest rate does end up sufficiently lower through averaging. If not – carefully consider if federal consolidation makes sense. Alternatively, you can consolidate just the highest rate loans together excluding any lower rate ones from blending.

Top Lenders to Consider

Federal student loan consolidation always goes directly through the Department of Education’s StudentAid.gov site – allowing borrowers to easily combine multiple federal education loans into the following:

  • Direct Consolidation Loans
  • FFEL Consolidation Loans

Private student loans lack federal protections and require refinancing instead through private banks/lenders to secure any improved rates or terms. Federal consolidation uniquely hitches exclusive benefits and protections to student borrowers regardless of financial credentials.

Auto Loan Refinancing

Like federal student loan consolidation, refinancing auto loans rolls balances over to an entirely new loan potentially featuring improved terms like:

  • Lower interest rates
  • Flexible loan durations
  • Improved credit standing
  • Lump-sum payoff capabilties

The Benefits

Auto loan refinancing shines by:

  • Securing lower fixed interest rates saving money
  • Enabling flexible loan terms matching evolving needs
  • Building/rebuilding credit through diligent repayment
  • Creating lump-sum payoff opportunities slashing interest paid

Responsible borrowers stand to gain cheaper monthly payments, total interest savings, and credit score boosts when strategically refinancing auto loans.

What to Look Out For

On the flip side, refinancing auto loans does require a hard credit check temporarily lowering scores. Doing multiple refinances in a short window hurts. This makes refinancing premium rates difficult to secure.

Additionally, giving up 0% promotional financing or manufacturer discounts offered on existing auto loans potentially saves less long-term versus simply sticking it out with current terms. Run the numbers in advance before pursuing refinancing.

Top Lenders to Consider

Today’s ultra competitive landscape pits major banks, credit unions and specialized auto lenders against each other all competing for loan refinancing business. Our top rated auto loan refinancing picks include:

  • Lightstream – Refinancing as low as 3.49%
  • Earnest – Refinancing down to 2.49% fixed APR
  • Laurel Road – Competitive fixed and variable rates
  • LendingTree – Up to 6 refinance offers in minutes
  • PenFed Credit Union – Some of the lowest auto refinancing rate quotes

Input some quick initial details through online tools for personalized rate and payment estimates on exactly how much refinancing could save monthly and long term.

Should I Pursue Debt Consolidation?

Before pursuing loan consolidation or refinancing options, weigh the following pros and cons according to your specific debt situation:


  • Lower Interest Rates Save Money
  • Simplify Scattered Loan Payments
  • Organize Bills By Due Date
  • Consolidate Different Loan Types
  • Enhance Credit Mix Boosting Scores


  • Loan Consolidation Application Checks Hurt Credit Scores Temporarily
  • Refinancing Better Rate Loans Could Lose Previous Savings
  • Open Credit Cards Remain Tempting Without Cancellation
  • Aggressive Lenders Threaten Just Transitioning Debt Issues
  • Giving Up Special Loan Terms For Refinancing May Not Save Money Long Term

Carefully considering these generalized pros and cons against your actual situation will determine if consolidation delivers sufficient financial relief. Those struggling with high payment burdens across scattered loan accounts tend to gain the most relief from consolidating using reputable lenders at better rates.

On the flip side – borrowers enjoying current lower rate debts that have not spiraled out of control may endure unnecessary credit damage or interest rate increases attempting consolidation or refinancing loans already featuring decent terms.

What Are Alternatives To Debt Consolidation?

Beyond formal loan consolidation or refinancing, additional options to alleviate debt pressures include:

  • Requesting lower credit card rates from issuers
  • Negotiating medical bill payments and patient discounts
  • Enrolling federal student loans in income-driven repayment plans
  • Using limited 0% balance transfer credit cards tactically
  • Trying debt management plans alongside counseling
  • Discussing partial debt settlement for unsecured obligations
  • Developing stricter budgets allowing extra payments tackling highest rate debts
  • Boosting income with side jobs or entrepreneurship

These alternatives potentially supplement or replace aspects of formal consolidation and refinancing vehicles covered earlier. Evaluate all avenues against your unique mix of debts and financial circumstances. An optimal combination of consolidation strategies, alternative relief options, and sound budgeting with extra payments often best equips borrowers finally moving beyond debt stresses.


I want to consolidate my loans no longer must feel like a desperate plea for relief but rather an actionable plan to grab control over your financial life. Comparing multiple lenders across each debt category – credit cards, payday loans, medical bills, student loans, auto loans, and more – opens doors to better rates, terms, and programs specially designed to provide struggling borrowers room to breathe and repay what they owe.

Consolidating existing loans or lines of credit also simplifies juggling multiple payments into one smooth monthly bill and often significantly lowers interest costs over time. While consolidating or refinancing loans is not always the best path forward, having this arrow in your financial quiver alongside other debt relief alternatives helps ensure you always have options to improve difficult debt situations.

FAQs About Loan Consolidation

How does debt consolidation affect your credit score?

In the short run, loan consolidation checks your credit temporarily lowering scores 10-30 points. But in the long run – diligently repaying consolidated loans enhances credit diversity and lowers utilization ratios. This helps raise scores over years of on-time payments.

Where can I get a personal loan to consolidate debt?

Top lenders offering personal loans for credit card and other debt consolidation needs with online applications include LendingClub, Lightstream, Marcus by Goldman Sachs, Upgrade, and Payoff. Banks and credit unions also furnish consolidation loans.

What is the difference between loan consolidation and refinancing?

Consolidation combines multiple existing debts into a new single loan at generally improved terms. Refinancing pays off one existing loan with a new loan at better terms. The goal of reducing rates for monthly savings applies to both consolidation and refinancing scenarios.

Should I consolidate or pay off debts individually?

If juggling numerous scattered loan payments has become unmanageable alongside high amounts of interest – consolidation often makes sense to simplify and save money long-term. But consider losing any low rate loans or special terms that consolidation would replace. Paying highest rate debts first while maintaining others can also work.

What credit score is needed to qualify for consolidation loans?

Minimum credit scores for consolidation loan approval often fall in the high 600s to low 700s depending on the lender. Federal student loan consolidation bases eligibility on having existing federal student loan balances rather than credit scores. Exceptional rates require 740+ credit ratings.

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