Personal loan rates currently range from around 4% to 36%, depending on the lender, borrower’s creditworthiness, and other factors. While interest rates are not the only costs associated with taking out a loan, it’s important to compare lenders to identify the best personal loan rates available.
We reviewed 29 popular lenders based on 16 data points in the categories of loan details, loan costs, eligibility and accessibility, customer experience and the application process. We chose the best lenders based on the weighting assigned to each category:
- Loan cost: 35%
- Loan details: 20%
- Eligibility and accessibility: 20%
- Customer experience: 15%
- Application process: 10%
Within each major category, we also considered several characteristics, including available loan amounts, repayment terms, APR ranges, and applicable fees. We also looked at minimum credit score requirements, whether each lender accepts co-signers or joint applications, and the geographic availability of the lender. Finally, we evaluated each provider’s customer support tools, borrower perks, and features that simplify the borrowing process—like prequalification options and mobile apps.
Where appropriate, we awarded partial points depending on how well a lender met each criterion.
Tips for Comparing Personal Loan Rates
In general, annual percentage rates (APRs) vary by lender and depend on several factors, including the applicant’s creditworthiness. However, there are several things you can do to access the lowest rate possible when applying for a personal loan. Consider these factors when comparing personal loan rates:
Credit score and eligibility requirements. Credit scores are the main factor in determining the interest rate a borrower qualifies for through a lender. Evaluate each lender’s eligibility requirements to see how your score compares to the minimum credit score requirement. This can help determine whether you’re likely to qualify for the lender’s lowest—or highest—rates.
Average borrower rates. While banks and online lenders advertise a range of available interest rates, it is not always clear how many borrowers actually qualify for the most competitive offerings. Some lenders publish the average interest rate borrowers qualify for, but it may be necessary to read customer reviews to see whether the average borrower qualifies for competitive rates.
Loan amounts and repayment terms. Higher loan amounts typically come with higher interest rates to make up for the increased lending risk. Likewise, longer loan terms are often accompanied by higher APRs. When comparing lenders, consider whether the personal loan rates can be reduced by changing the structure of the loan.
Additional costs. Beyond a lender’s interest rates, consider whether borrowers are charged any additional fees that can increase the APR and overall cost of borrowing. This may include origination fees that are charged when the loan is disbursed, late fees or prepayment penalties.
What Are Current Personal Loan Rates?
Current personal loan rates range from around 4% to 36%, with the average hovering around 12-15%. That said, available APRs vary by lender, and only the most qualified borrowers can access the lowest rates.
What Is A Good Interest Rate On A Personal Loan?
A good interest rate on a personal loan is one that is lower than the national average. So, a rate below 12% to 15%—the average as of February 2023—is considered a good personal loan rate. However, borrowers with excellent credit scores may qualify for even lower rates.
How Lenders Determine Personal Loan Rates
Lenders determine personal loan rates based on several factors, but the applicant’s credit score and overall credit profile are the most important. Many traditional and online lenders also look at the prospective borrower’s income and current outstanding debts to determine their debt-to-income ratio (DTI).
DTI is the ratio of a borrower’s monthly income to their monthly debt service and is used to evaluate an applicant’s ability to make on-time payments. The higher the DTI, the riskier the borrower—and the higher the interest rate they’ll likely receive.
When determining personal loan rates, some online and alternative lenders also look at a prospective borrower’s occupation and education to evaluate earning potential. Likewise, lenders may evaluate the risk posed by a borrower based on where they live.
How to Get the Best Personal Loan Rates
The most competitive personal loan rates are typically reserved for the most creditworthy borrowers. However, there are other factors that can impact rates, and it is possible to get a lower rate without a stellar credit profile. Follow these tips to get the best personal loan rates:
Understand your credit report. Before prequalifying or applying for a personal loan, request a copy of your credit report from one of the three main credit bureaus—Equifax, Experian and TransUnion. A credit report includes valuable insight into how your credit scores are calculated and how much risk you pose to lenders. Likewise, check your credit score and use it to prequalify for an APR before submitting to a hard credit inquiry.
Calculate the best loan amount and term. Personal loan APRs are generally higher for larger loans and more extended repayment terms. That said, shorter repayment terms mean larger monthly payments. Use a personal loan calculator to determine how much monthly payment you can afford, and then opt for the shortest possible loan term.
Apply with a co-signer or co-borrower. If you won’t qualify for a competitive APR based on your personal credit, consider applying with a co-borrower or co-signer who has a higher credit score. This approach can lead to higher approval odds and lower personal loan rates.
Choose a secured loan. A secured personal loan is one that is collateralized by a valuable asset, such as real estate. If a borrower defaults on a secured loan, the lender can seize the collateral in order to recoup the outstanding loan balance. Because secured loans are less risky to lenders, they may be a better fit for borrowers who can’t qualify for a personal loan or a competitive APR.
Take advantage of rate discounts. Many lenders offer rate discounts to borrowers who sign up for automatic payments during the loan application process. When comparing lenders, choose an option that offers autopay discounts or other savings opportunities.
Opt for a fee-free lender. To remain competitive, some lenders moved to a fee-free structure that does not charge origination fees, late payment fees, prepayment penalties or other additional costs. Choosing a fee-free lender can reduce the overall cost of a loan, thereby reducing the APR.
Pros and Cons of Personal Loans
Before taking out a personal loan to consolidate debt or finance your next purchase, it’s a good idea to run through the pros and cons. Below are the advantages and disadvantages of personal loans you should be aware of.
- Lenders offer flexible loan amounts
- Unsecured loans typically require no collateral or down payment
- Interest rates are often fixed, and payments are made in fixed installments
- Borrowers with good credit scores may qualify for low rates
- Loan funding may happen in a week or less
- Funds can be used to pay for almost any type of legal personal expense
- Loans may have origination fees
- Collateral may be required if you don’t have good credit
- Borrowers with less-than-perfect credit may qualify for higher interest rates
- Loans can damage your credit history if you don’t make on-time payments
- Late payment fees or prepayment penalties may increase the cost of the loan
- Borrowing puts you in debt
Average Personal Loan Interest Rates By Credit Score
Interest rates vary by lender, borrower qualifications and loan characteristics. However, interest rates are best predicted by a borrower’s credit score. According to Experian, the average interest rates for Vantage Score ranges are as follows:
|Credit classification||Vantage V4 credit range||Average estimated |
interest rate (%)
|Super prime||781 to 850||6.39|
|Prime||661 to 780||10.54|
|Near prime||601 to 660||15.63|
|Subprime||500 to 600||17.27|