Average personal loan interest rates — and how to get a low APR
Personal loan rates can vary greatly depending on factors like your financial situation and your credit score.
Checking average personal loan rates is a savvy first step if you’re considering borrowing. Personal loan rates are usually expressed as the APR (or annual percentage rate) which comprises the interest rate plus upfront fees.
The average personal loan interest rate (for a 24-month term) was 12.17% in August 2023, according to the most recent data from the Federal Reserve. However, personal loan interest rates vary greatly depending on factors like your financial situation and your credit score. Generally, lenders advertise personal loan rates for unsecured loans ranging between 5.20% and 35.99%.
Average personal loan interest rates by type of lender
Personal loans allow you to borrow for myriad reasons, including to consolidate debt, but they come at a cost. This is why you want to aim for the lowest interest rate you can find to save the most money.
Below, we break down average rates among some of our partner online lenders, banks, and credit unions.
To understand how rates can impact your borrowing costs, use a personal loan calculator. Just plug in your potential loan amount, repayment term, and an estimated APR. You can use the rates below, but you'll get a better sense of the APR you might qualify for if you prequalify first. Prequalification is a quick way to compare rate estimates between lenders and doesn't ding your credit. It's not an offer of credit though (you'll need to formally apply). Once you do apply, the lender will conduct a hard credit pull which could ding your score temporarily by a few points.
Average personal loan rates among online lenders
You might choose an online lender for a personal loan because of its streamlined application process or other digital-oriented benefits.
Average personal loan rates among banks
You might prefer to borrow a personal loan from a bank to keep your finances under one roof, have brick-and-mortar branch access, or for other perks.
Average personal loan rates among credit unions
If you’re a credit union member, you may want to start your personal loan search with the credit union you belong to. Because credit unions are not-for-profit institutions, they tend to charge less in interest rates and fees than banks.
What factors affect personal loan rates?
Knowing what factors affect personal loan rates can help you learn what steps you need to take now and in the future to ensure you can access the most favorable rates.
- Credit score: Generally, the higher your credit score is, the lower the interest rate you’re likely to qualify for. This is because lenders take a high credit score to mean that you know how to use credit responsibly and are likely to repay your debt on time. Most lenders prefer a FICO score of 670 and above.
- Debt-to-income ratio (DTI): You want a lower DTI to entice lenders to offer you a lower APR. Your DTI — your monthly debt payments divided by how much you earn monthly before taxes, expressed as a percentage — represents how much of your income is currently going to debt obligations. You want this number as low as possible to show you can comfortably afford to make your payments. Lenders typically prefer a DTI of 36% or less.
- Income: Even if you don’t have any debt, lenders will consider your income to make sure it’s feasible to consistently make your loan payments on time.
Fox Money rating
Fixed (APR)
6.99% - 25.49%
Loan Amounts
$5000 to $100000
Min. Credit Score
700
Fox Money rating
Fixed (APR)
7.80% - 35.99%
Loan Amounts
$1000 to $50000
Min. Credit Score
620
Fox Money rating
Fixed (APR)
-
Loan Amounts
$2500 to $40000
Min. Credit Score
660
Fox Money rating
Fixed (APR)
8.49% - 17.99%
Loan Amounts
$600 to $50000
Min. Credit Score
760
Fox Money rating
Fixed (APR)
8.49% - 35.99%
Loan Amounts
$1000 to $50000
Min. Credit Score
600
Fox Money rating
Fixed (APR)
8.98% - 35.99%
Loan Amounts
$1000 to $40000
Min. Credit Score
660
Fox Money rating
Fixed (APR)
8.99% - 29.99%
Loan Amounts
$5000 to $100000
Min. Credit Score
Does not disclose
Fox Money rating
Fixed (APR)
8.99% - 35.99%
Loan Amounts
$2000 to $50000
Min. Credit Score
600
Fox Money rating
Fixed (APR)
9.95% - 35.99%
Loan Amounts
$2000 to $35000
Min. Credit Score
550
Fox Money rating
Fixed (APR)
-
Loan Amounts
$5000 to $35000
Min. Credit Score
700
Fox Money rating
Fixed (APR)
11.69% - 35.99%
Loan Amounts
$1000 to $50000
Min. Credit Score
560
Fox Money rating
Fixed (APR)
11.72% - 17.99%
Loan Amounts
$3000 to $40000
Min. Credit Score
640
Fox Money rating
Fixed (APR)
-
Loan Amounts
$20000 to $200000
Min. Credit Score
660
Fox Money rating
Fixed (APR)
14.30% - 35.99%
Loan Amounts
$3500 to $40000
Min. Credit Score
640
Fox Money rating
Fixed (APR)
18.00% - 35.99%
Loan Amounts
$1500 to $20000
Min. Credit Score
540
Fox Business does not make or arrange loans.
How to get a low rate on a personal loan
Before applying for a personal loan, consider taking some of these steps to improve your odds of getting a lower interest rate.
- Check your credit report: Visit AnnualCreditReport.com and see if there’s room for improvement. That way, you can figure out what steps you’ll need to take to improve your score. You can also look for any errors hurting your credit score so you can work to have them removed from your credit report.
- Shop around: Play the field a bit when it comes to personal loans. Research and compare different lenders to get an idea of which lenders can offer you the best rates and terms. Take advantage of prequalifying, which allows you to check eligibility and APRs without a hard credit pull that can temporarily ding your credit score. Remember that prequalification is not an offer of credit, and your final rate may be higher.
- Pay your bills on time: The best way to improve your credit score, and therefore improve your chances of a lower rate, is to pay all of your bills on time. Set calendar reminders to make payments or set up automatic payments so you never accidentally miss one.
- Consider a co-applicant: If you plan to share the use of the personal loan funds with a co-borrower, or if you have a cosigner ready to support your loan application, consider adding a co-applicant. A co-borrower is equally responsible for payments — and equally entitled to the funds — while a cosigner is only responsible if you’re unable to pay, and does not have access to the loan funds. Either could help you qualify and secure a lower rate than you could have netted on your own.
- Look at secured loans: If you’re struggling to qualify for an affordable interest rate, you could look for a secured personal loan. While unsecured loans are more common, applying for one that requires collateral, such as your car or the fixtures in your home, can help you lower your interest rate. Just be aware that if your repayment on a secured loan goes awry, the lender could seize your collateral.
- Pay off debt: Remember, it’s important to have a low DTI if you want to qualify for lower interest rates. If you can, pay off some debt before applying for a personal loan to better your odds of receiving a lower rate. Paying less interest can save you a lot of money over the life of a personal loan.
FAQ
What’s a good interest rate for a personal loan?
Generally, you want to shoot for an average or below-average interest rate when you apply for a personal loan. The average personal loan interest rate for loans with a 24-month term was 12.17% as of August 2023, according to the Federal Reserve. Ideally, you would qualify for an interest rate lower than that amount. Otherwise, you risk being handed a credit card-like APR on a personal loan.
Will applying for a personal loan hurt my credit?
Applying for a personal loan leads to a hard inquiry on your credit report that temporarily hurts your credit score. To avoid too many hard inquiries on your credit report, prequalify with lenders that deliver quotes via a soft credit check. Once you’ve narrowed down your list of potential lenders, aim to more formally apply for personal loans shortly thereafter (within a few weeks).
Comparison shopping for months can lead to multiple hard inquiries. In contrast, if you do all of your shopping at once, multiple loan applications for the same type of lending product tend to only count as one hard inquiry.
Do personal loans come with fees?
When comparing personal loan offers, look closely at the potential fees each lender charges. All lenders choose to charge different fees at different rates. But it’s fairly common to come across origination, prepayment penalty, application, late, and payment processing fees when borrowing and repaying a personal loan.
Related articles: