A good interest rate on a debt consolidation loan depends on your credit score: below 10% for excellent credit (740+), 10 to 15% for good credit (700-739), 15 to 25% for fair credit (640-699), and 25 to 36% for subprime borrowers (under 640). Anything above 36% is generally predatory territory and rarely makes mathematical sense for consolidation. The right benchmark for you is whatever beats your existing weighted-average APR by at least 4 to 5 percentage points.

The current rate ranges by credit tier (mid-2025 data).

Excellent credit (740+): 7 to 11 percent APR for unsecured personal loans. Lenders like LightStream, SoFi, and Marcus quote in the 7-9% range for 36-month terms; Discover and others run 9-11%. Credit unions can offer 6.5-9 percent for established members.

Good credit (700-739): 10 to 15 percent APR. Most online lenders' standard tier. SoFi, Best Egg, and Marcus all serve this segment. Rates rise 1-2 points for longer terms.

Fair credit (640-699): 15 to 25 percent APR. Upstart, Avant, LendingClub, OneMain Financial. The middle of this range is typical; the upper end starts to compete with credit card rates and reduces the consolidation benefit.

Subprime (580-639): 25 to 36 percent APR. OneMain Financial, OppLoans, some online subprime lenders. The math gets harder; consolidation savings are smaller and origination fees are higher.

Below 580: rare to qualify for unsecured consolidation; if approved, rates run 30-36% with high origination fees. Often better to use credit counseling or settlement instead.

The benchmark that actually matters. Calculate your weighted-average APR on existing debts: sum of (each balance × its APR) divided by total balance. The consolidation loan rate needs to beat this number by at least 4 to 5 percentage points to make the loan worth the inquiry, origination fee, and recovery time.

Example calculations.

Borrower A: $20,000 at 22% across cards. Weighted-average APR: 22%. Consolidation loan offer: 9%. Spread: 13 percentage points. Math: roughly $5,000 in interest savings over a 5-year payoff. Loan makes obvious sense.

Borrower B: $15,000 at average 18% across cards (some at 12%, some at 22%). Weighted-average APR: 18%. Consolidation loan offer: 14%. Spread: 4 percentage points. Math: roughly $1,200 in interest savings over 5 years. Marginal but probably worth the simplification benefit.

Borrower C: $10,000 at average 14% across cards (one card at 14%, one promotional balance transfer at 0% with 12 months left). Weighted-average APR: 14%. Consolidation loan offer: 16%. Spread: -2 percentage points. The consolidation loan is more expensive than the existing debt. Don't take it.

Why APR matters more than rate. Two loans can have the same rate but different APRs because of origination fees. A 9% loan with a 5% origination fee has an effective APR of about 11.5%. A 9% loan with no origination fee is actually 9%. The Truth in Lending Act (15 U.S.C. § 1601) requires APR disclosure precisely so borrowers can compare loans honestly. Always compare APR, not rate.

What's predatory at each tier.

For excellent credit: rates above 14% are not market-competitive. The lender is either inexperienced, charging hidden fees, or counting on borrower confusion.

For good credit: rates above 18% are unusual. Likely high-fee or includes broker markup.

For fair credit: rates above 28% on a $20,000+ loan are likely capping the borrower in a worse position than the original cards. Compare carefully.

For subprime: 36% is the federal usury cap most states recognize, though some states allow higher. The Military Lending Act (10 U.S.C. § 987) caps at 36% for active-duty military and dependents. State-by-state usury laws vary. Above 36% is illegal in most states for personal loans.

Federal credit unions cap personal loan rates at 18% by federal law (12 CFR § 701.21(c)(7)). Some federal credit unions cap their consolidation loans at 12-15% as a matter of policy. State credit unions vary.

How to get the best rate available to you.

Pre-qualify with 4-5 lenders. Soft pulls don't affect score. The rate spread between lenders for the same borrower is often 2-4 percentage points; shopping matters.

Try a credit union. Often 1-3 percentage points lower than online lenders for similar credit profiles, especially for established members.

Improve your score before applying if you can wait 60 to 90 days. Paying card balances down to under 30% utilization can move you up a tier. The score improvement compounds: lower utilization plus the lower rate it produces.

Choose a shorter term. Lenders often quote slightly lower rates for 36-month versus 60-month terms because the lender takes less risk over a shorter window.

Add a co-applicant if eligible. A spouse or family member with stronger credit can sometimes drop the rate by 1-3 percentage points. Trade-off: they're equally liable.

Negotiate. Once you have offers from 2-3 lenders, call the one you prefer and tell them another lender offered a lower rate. Some lenders will price-match; others won't, but it costs nothing to ask.

The cap to walk away from. If your best offer is at or above your weighted-average existing APR, don't take the loan. The consolidation only works on rate spread; without spread, you're paying origination fees for no benefit. Use a different tool (DMP, balance transfer, snowball method) instead.

Compare APR, target a spread of 4+ points below your weighted-average existing APR, shop at least 3 lenders, and let the math drive the decision rather than the marketing.