During the last seven days, borrowers with good credit looking for personal loans prequalified for rates that were unchanged for 3-year loans and higher for 5-year loans when compared to fixed-rate loans for the seven days before.
For borrowers with credit scores of 720 or higher who used the Credible marketplace to select a lender between September 25 and October 1:
Personal loans can be an excellent option for consolidating and paying off debt. You can also use personal loans for various other reasons, including covering medical bills and big purchases or funding home improvement projects.
Personal loan interest rates did not change over the last seven days for 3-year loans — meanwhile, 5-year loans spiked by 0.62 percentage points. Interest rates for both loan terms remain significantly higher than they were this time last year. Still, borrowers can take advantage of interest savings with a 3- or 5-year personal loan right now. Both loan terms offer interest rates that are much lower than higher-cost borrowing options such as credit cards.
When determining if a personal loan is right for you, you’ll need to consider several factors, including what rate you can qualify for. Comparing multiple lenders and rates could help ensure you get the best possible personal loan for you.
Learn more: Best personal loans
Here are the most recent trends in personal loan interest rates from the Credible marketplace, updated weekly.
The chart above presents average prequalified rates for borrowers with credit scores of 720 or higher who used the Credible marketplace to choose a personal loan lender. Today’s personal loan interest rates may differ for borrowers with lower credit scores.
For the month of September 2023:
Current personal loan interest rates vary by lender, as well as by credit score and loan term. You can use an online tool like Credible’s marketplace to compare loan options from different private lenders. Checking your rates won’t affect your credit score.
All Credible marketplace lenders offer fixed-rate loans at competitive rates. It’s a good idea to request personal loan rates from multiple lenders to compare your options, since lenders use different methods to evaluate borrowers.
In September, the average prequalified rate selected by borrowers was:
The interest rate can differ depending on different factors, like your credit score, which type of personal loan you’re seeking, and the loan repayment term.
The chart above shows that a good credit score can lead to a lower interest rate. Today’s personal loan rates tend to be higher on loans with fixed interest rates and longer repayment terms.
Many factors influence the interest rate a lender may offer you on a personal loan. Luckily, you can boost your chances of getting a lower interest rate by taking a few steps. Here are some strategies to help you qualify for a lower interest rate.
Generally, people with higher credit scores qualify for lower interest rates. Steps that can help you improve your credit score over time include:
Personal loan repayment terms can range from one to a few years. Shorter terms typically come with lower interest rates since the lender’s money is at risk for a shorter period of time.
If your financial situation allows, applying for a shorter term could help you score a lower interest rate. Keep in mind the shorter term doesn’t just benefit the lender — by choosing a shorter repayment term, you’ll pay less interest over the life of the loan.
You may be familiar with the concept of a cosigner if you have student loans. If your credit isn’t good enough to qualify for the best personal loan interest rates, finding a cosigner with good credit could help you secure a lower interest rate.
Just remember, if you default on the loan, your cosigner will be on the hook to repay it. And cosigning for a loan could also affect their credit score.
Before applying for a personal loan, it’s a good idea to shop around and compare offers from a few different lenders to get the lowest rate for you. Online lenders typically offer the most competitive rates, and they can be quicker to disburse your loan than a brick-and-mortar establishment.
Be sure to find a lender who fits all or most of these factors for your loan.
Learn more: How to Prequalify for a Personal Loan
A few factors can affect your monthly dues and your total interest costs:
- Loan amount
- Interest rate
- Repayment term
Aside from the principal amount you borrow, your monthly payment is also affected by the annual interest rate and repayment term.
For example, let’s say you take out a $20,000 loan with an interest rate of 15% and a repayment term of seven years, your monthly payment will be $386, and you’ll pay a total of $12,419 in interest. By the time you pay off your loan, you will have paid $32,418.
To determine how the interest rate and repayment term affect the overall cost, let’s use the same loan amount but with an interest rate of 8% and a repayment term of five years. Your monthly payment would be $406, but you would pay an additional $4,332 in total interest, bringing your overall cost to $24,331.
Having a lower interest rate and lower loan term can increase your monthly payment (since you’re essentially paying it off much sooner). Still, your total cost will be significantly lower than if you had a higher interest rate and a longer repayment period.
You can use a personal loan calculator to determine your own monthly payment and the total interest you’ll pay over the life of your loan.
Your credit and income, among other markers, help lenders determine what rate you receive.
Credible is a multi-lender marketplace that empowers consumers to discover financial products that are the best fit for their unique circumstances. Credible’s integrations with leading lenders and credit bureaus allow consumers to quickly compare accurate, personalized loan options ― without putting their personal information at risk or affecting their credit score. The Credible marketplace provides an unrivaled customer experience, as reflected by over 5,200 positive Trustpilot reviews and a TrustScore of 4.7/5.