Current Average Personal Loan Interest Rates: What to Expect

0
Current Average Personal Loan Interest Rates: What to Expect

Affiliate links for the products on this page are from partners that compensate us and terms apply to offers listed (see our advertiser disclosure with our list of partners for more details). However, our opinions are our own. See how we rate products and services to help you make smart decisions with your money.

The average overall interest rate for personal loans is 21.44%, same as last week.

You can use a personal loan to pay for anything from weddings to home renovations, dental work, and even income taxes. However, most borrowers use them to consolidate debt. That purpose is so popular that some lenders, including Happy Money and Reach Financial, specialize in debt consolidation loans.

Best Personal Loan Interest Rates

Borrowers with excellent credit typically get the best low-interest personal loans, while borrowers with bad credit are offered the highest rates.

Generally speaking, a good loan interest rate is in the single digits. The lower the interest rate, the less you’ll pay over the life of the loan. These are the top three best APRs available among the 27 lenders we track:

American Express Personal Loan: 5.91%

Reach Financial Personal Loan: 5.99%

LightStream Personal Loan: 6.94%

Average Overall Personal Loan Rates

We’ve put together a database of 27 personal loan products and averaged their rates to help you get a handle on the current landscape of loans for all purposes. You’re more likely to get a lower rate with a better credit score.

The lowest rate of the companies we track is from American Express Personal Loan, which has a minimum APR of 5.91%. The highest rate is fromNetCredit Personal Loans, which has a maximum APR of 99.99%.

All borrowers aren’t necessarily qualified for the rates above. The rates you’ll get depend on your credit score and other aspects of your financial situation.

Average Personal Loan Rates by Credit Score

These rates are based on data from borrowers who applied for loans and received rates on loans for all purposes.

Percentage of Borrowers by Loan Purpose

These loan purposes are based on data from 149 borrowers who applied for personal loans and received rates.

Average Debt Consolidation Rates

We’ve put together these average rates from our database of 23 debt-consolidation loan products for this past week:

Debt Consolidation Rates by Credit Score

A higher credit score generally means you’ll receive a lower rate, but not always.

The average rates (APRs), terms, and loan amounts were provided by Even Financial, sourced through MoneyLion. This information is based on aggregated, anonymized offer data from MoneyLion’s lender marketplace of financial services providers as of January 6. The data presented in this table applies only to lenders with APRs below 30% and is not specific to any individual lender or consumer.

Factors Affecting Personal Loan Rates

  • Your credit score — The higher your credit score, the more likely you are to qualify for the lowest rates. Lenders rely heavily on credit scores to determine each borrower’s rate eligibility. 
  • The loan term — Longer loan terms usually equal lower monthly payments, but be aware that you’ll end up paying more in interest with a longer term. 
  • The type of lender you choose — When it comes to lenders, you have options. So, it’s worth shopping around and comparing rates. For instance, Reach Financial currently offers the lowest rates starting at 5.99%, and PenFed Credit Union offers its members personal loan APRs starting as low as 8.99%. 
  • The current economic climate — The Federal Reserve influences personal loan interest rates. This means that borrowers can also expect lower rates when the Fed cuts rates. 

Tips to Get the Best Personal Loan Rates

The best personal loan rate for you will greatly depend on your credit score and overall financial situation. Here are other helpful tips to keep in mind: 

  • Take time to compare lenders. Finding the lowest rates often involves getting quotes from multiple lenders. 
  • Consider a shorter term length. Although your monthly payments may be higher, the total amount you pay in interest will be less. 
  • Join a credit union. Credit unions are known to offer competitive rates to their members. Plus, some credit unions make joining easy and only require you to live in a specific area. 
  • Improve your credit score. As mentioned, your credit score determines the rates you qualify for, so building good credit is key. You may even consider waiting to apply for a personal loan until you have a good credit score to be eligible for a lower rate. 

Personal Loan Interest Rate FAQs

Borrowers, on average, are getting an interest rate of around 21% on personal loans. The rates you get will depend on the term of the loan, your credit score, and other aspects of your financial situation.

Reach Financial currently has the lowest interest rate on a personal loan at 5.99%. However, personal loan interest rates vary widely, with some borrowers paying as much as 99.99%. Rates are determined based on a broad range of factors, including the borrower’s creditworthiness and the loan term.

The interest rate your bank will offer you for a personal loan will depend on your credit score, debt-to-income ratio, income, and other aspects of your financial situation. If you receive a lower offer from another lender, it is sometimes possible to negotiate the rate with your bank.

There are plenty of free services to check your credit score, such as Capital One CreditWise and Experian Boost. Most credit card companies also provide a score update on your monthly statement, or you can check your scores through your online account at any time. 

Fixed interest rates remain the same for the entirety of your loan term, while variable rates can change. So, unless you expect your interest rate to decrease, it’s typically easier to manage a personal loan with a fixed interest rate because of the predictability.


link

Leave a Reply

Your email address will not be published. Required fields are marked *