At a Glance

Consolidating your debt means taking out a single loan to pay off multiple unsecured loans, such as credit cards, personal loans, auto loans, student loans, and others. Debt consolidation can help you pay off your loans faster, and could lower your total payments. To find the best online debt consolidation loans, you should know what they are and the process for obtaining one.

In this article, you’ll learn about:

Is online debt consolidation right for you?

Online debt consolidation may be right for you if your monthly debt payments don’t exceed 50% of your monthly gross income, you have a decent credit score and can qualify for a low or 0% APR, you have a consistent cash flow and can continue to make monthly payments, and you can pay off the consolidation loan within five years.

Online vs. traditional debt consolidation

Online consolidation loans are a new form of traditional debt consolidation. At the end of the day, both types of consolidation loan companies do the exact same job. However, getting a personal debt consolidation loan online affords you the flexibility to research different lenders from the comfort of your couch and compare different offers side-by-side.

Otherwise, you would be forced to drive around town to different lenders while writing down the various offers they have available to you. An added benefit of getting a credit card consolidation loan online is that you can likely see if you’re preapproved for the loan instantly without having to take the time to wait for the decision.

Learn online debt consolidation process

The online debt consolidation process will consist of a few primary steps. First and foremost, you will need to conduct research on the different debt consolidation lenders in your area to see what type of offerings are available. After seeing the different lenders in your area, you will need to gather some of the following information:

  • Desired consolidation loan amount: Add up the totals of all forms of debt you are wishing to consolidate into a single loan in order to determine how much to request.
  • View your credit score: Look at your current credit score to see which lenders you qualify for.
  • Gather personal and financial information: Your current address, income streams, any dependents, potential co-signers, and more are all examples of information you will need in order to apply.

After choosing your lender and applying with the above information, the lender will make a decision on whether or not to approve you for the loan.

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Benefits of online debt consolidation

Online debt consolidation means you’re doing the entire process of consolidating your debt online. This can make securing a debt consolidation loan faster and easier than ever. The primary benefits of online debt consolidation include:

  • Online shopping. You can compare lenders, interest rates, eligibility criteria, repayment details, and more without having to step foot in a bank or credit union location or even make a phone call. There are a number of websites that have already compiled the top options, most of which offer ways to sort and filter those that meet your needs. Or, you can use internet searches to find your own options and compare information.
  • Online application. Once you find the lender and option that you want, you can take care of the entire application process online. These online applications will ask the same questions and request the same information you’d need at a bank or credit union, which you can fill out or upload right from your computer. These applications can be completed at your own pace, wherever you are, and submitted when complete.
  • Better tools. Free online tools such as debt consolidation calculators can help you decide if debt consolidation is right for you, even providing potential savings in interest, monthly payments, and estimated debt-free timelines. Some consolidation companies also offer live messaging or texting, so it’s quick and easy to chat with debt counselors and get a plan recommendation.

Additionally, most online tools are data-driven instead of people-driven. This means that you can share information about your exact situation and get a solution calculated specifically for you, ensuring you get the best option for your goals.

Downsides to online debt consolidation

If you are just exploring options for paying off your debt, you may not be sure if debt consolidation is right for you, especially because there are some risks. Because online debt consolidation means you likely don’t ever have to talk to a person, it may not be the best option for those who:

  • Would prefer to talk to a person rather than conduct their own research.
  • Don’t have access to the internet or a computer.
  • Need more help understanding their options.

Another downside is that some online debt consolidation companies are scams. For example, they may charge for their services. This could be a percentage of the amount of your original debt, or a percentage of the amount you’ve agreed to pay. In this case, it’s better to go through a bank or credit union, but take advantage of the online services they offer.

They may also compromise your personal information, or significantly affect your credit score. Be sure to read all of the fine print and ask about any fees the lender may charge, and keep an eye out for any red flags.

How to consolidate your debt online?

The first step in online debt consolidation is to do your research. Start by using a debt consolidation calculator to better understand if debt consolidation is the right way to go. Ask yourself questions and prepare information such as:

  • How much debt you want to consolidate.
  • Current loan/debt terms, interest rates, totals, and details.
  • Your annual income.
  • Current credit score.

Then, search online for things like “best debt consolidation loans,” “debt consolidation options,” and “best debt consolidation companies.” Use comparison websites, or make your own spreadsheet, to track things like:

  • Loan amounts
  • Loan terms
  • Interest rates
  • Eligibility criteria
  • Minimum payments

Online lenders often work with borrowers with all types of credit and needs, and let you pre-qualify so you can get the most personalized rates and terms without impacting your credit score.

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How to choose an online debt consolidation loan?

When determining which debt consolidation loan is right for you, there are a few factors to pay attention to in addition to eligibility:

  1. Choose the loan offering with the lowest possible annual percentage rate (APR).
  2. Choose a lender offering zero to very few fees.
  3. Consider added features such as lenders who will handle the repayment of all your debt being consolidated on your behalf.
  4. Don’t take out a loan you are unable to meet the obligations for over the life of the loan.
  5. Consider lenders with flexible repayment options such as online payments, phone payment, in-person payments, and more.
  6. Review past customer ratings to see if the lender has a reputable history.

Apply for a debt consolidation loan online

Once you’ve finished researching and chosen a lender, you’re ready to apply for the loan. Gather documents such as:

  • Proof of identity
  • Proof of address
  • Proof of employment
  • Income verification
  • Education history
  • Social security number

Be sure to take your time reading the fine print and details of the application. Look out for extra fees, prepayment penalties, and whether the lender reports payments to credit bureaus. Also at this point, determine whether you need a cosigner with good credit to qualify for the loan.

When you’re complete with the application, submit it and wait to be notified that you’re approved for the loan you want. When you’re approved, the lender will either:

  • Offer direct payment, paying off your old debts directly to those creditors. Those accounts should have a $0 balance and be completely paid off. You will then make payments directly to your new lender within 30 days.
  • Deposit the new loan funds into your bank account, and you’ll use those funds to repay each debt individually. In this case, repay those old debts as soon as possible to avoid paying additional interest, and to eliminate the temptation to spend the funds on something else. You’ll then make your first payment to the new consolidation loan within 30 days.

Choosing an online debt consolidation company

Using an online debt management program to consolidate your credit card bill can be a great option to help you get your credit card debt under control. Because you’re consolidating your credit card bills into one monthly payment, it makes it easier to pay your bills on time and helps to cut down on interest charges and late fees.

Some programs have you go through a form of online credit counseling to qualify, which can help you create a budget and develop a plan for paying back your bills. Doing all of this online makes it easier to review your accounts and customize your plan for payment and staying out of debt in the future.

How to avoid online debt consolidation scams?

As with any type of loan, your goal should be to avoid losing money to a scam. Fortunately, there are a few key ways you can avoid falling into this trip:

  1. Verify the lender using previous customer reviews.
  2. Read the terms of your contract to ensure you are not receiving a payday loan.
  3. Avoid lenders who refuse to share information with you or are too pushy.
  4. Avoid lenders who promise to reduce your total debt amount – this is not possible with a debt consolidation loan as it simply combines your existing debt under one loan.
  5. You receive unsolicited offers from the company.

Learn more: How to Avoid Debt Consolidation Scams?


Yes, some debt consolidation companies offer loans to people with poor credit. The downside is you may only qualify for a loan with a higher APR, or less favorable loan terms or amounts. If you have a bad credit score, take steps now to try and improve it before applying for a consolidation loan.

Taking out a debt consolidation loan may initially lower your credit score due to the hard credit check, but over time, consolidating debt will help your credit score. This is because you will lower your credit utilization ratio, which measures how much credit you’re using, and it may also improve your payment history.

Learn more: Does Debt Consolidation Hurt Your Credit Score?

If you have multiple student loans, you may be able to combine them into one loan with a fixed interest rate. If you have federal loans, they can be consolidated using a federal consolidation loan. This process can take place online. If you have private loans, you can also consolidate these with a private consolidation loan. The process for applying would be the same as if you had other types of debt.