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Personal loan rates for January 2021
Compare APRs from top providers and learn what affects the rate you get.
This article was reviewed by Brad Stevens, a member of the Finder Editorial Review Board and 30-year veteran of the credit industry who specializes in rehabilitating struggling banks.
Personal loans usually come with fixed interest rates from 4% to 36%. Generally, you need to have excellent credit to get the lowest rates available — some experts identify 760 or higher as the sweet spot. Other aspects of your finances, the loan term and amount you apply for and can also influence your rate.
We reviewed over 130 lenders before selecting lenders with the best personal loan rates. Comparing offers from multiple lenders can help you find the best deal available to you.
9 lenders with the best personal loan rates
Most borrowers won’t qualify for the lowest advertised rate. So we considered the full range of rates lender offers when coming up with this list.
We also didn’t excluded offers that are only available to a select few borrowers such as community bank, local credit union or invitation-only loans. And we limited the number of connection services — many share the same lowest rates because they work with similar partners.
| Lender | Minimum APR | Maximum APR | |
|---|---|---|---|
| MyPersonalLoans.com | 3.09% | 35.99% | |
| LendingTree | 2.49% | Varies | |
| Wells Fargo | 5.74% | 20.24% | Read review |
| SoFi | 5.99% | 25.05% | |
| M&T Bank | 6.24% | 13.49% | Read review |
| PenFed Credit Union | 6.49% | 16.99% | Read review |
| U.S. Bank | 6.49% | 17.99% | Read review |
| Santander Bank | 6.99% | 16.99% | Read review |
| Marcus by Goldman Sachs | 6.99% | 19.99% | |
| Best Egg | 5.99% | 29.99% | Read review |
Many of these lenders warn that these personal loan interest rates are subject to change without notice. And the rate you receive depends on factors like your credit history, annual income and other factors. Prequalify with multiple lenders to find the best personal loan rates available to you.
What's in this guide?
Personal loan interest rates
Personal loan interest rates depend on a wide range of factors, including your credit score and the type of financing you get.
Interest rates by credit score
Your credit score is often a deciding factor when it comes to the rate you receive. Here’s the range of rates you might expect based on your personal credit score range. As this table shows, even borrowers with good credit — a score of 670 to 739 — often don’t get the lowest available rates. With bad credit — any score below 580 — you likely won’t be able to qualify for a personal loan and may have to turn to high-cost alternatives.
| Credit score range | Average rate |
|---|---|
| 720 and up | 7.63% |
| 680–719 | 11.88% |
| 660–679 | 18.53% |
| 640–659 | 26.15% |
| 620–639 | 38.64% |
| 580–619 | 65.70% |
| 560–579 | 105.39% |
| 560 and under | 113.62% |
Source: LendingTree consumer data, Q4 2019
While some personal loans stop at 36%, fair and bad credit borrowers can struggle to qualify for a personal loan at all. In many cases, they may be turning toward short-term loans like payday and installment loans. These can come with rates that top 300%.
Interest rates by financing type
Lenders tend to price different types of financing differently. Here’s how personal loan rates compare to credit cards and car loans from banks in the beginning of 2020.
| Type of financing | Average rates at a bank |
|---|---|
| Personal loan | 9.5% |
| Car loan | 5.14% |
| Credit card | 14.52% |
Source: Federal Reserve Consumer Credit Statistics, June 2020
Car loans are often less expensive because the lender uses the vehicle as collateral, which offsets some of the risk. If you want to lower your personal rate, consider backing a loan with collateral.
What is a good interest rate on a personal loan?
An interest rate under 12% could be considered a good interest rate — those are the types of rates that people with good credit qualify for. But what counts as a good rate really depends on the range of rates available to you, based on the type of loan you’re looking for.
One way to find out which lender offers a good rate for the loan amount and term you’re looking for is to prequalify with multiple lenders and compare offers.
Which bank has the lowest interest rate on a personal loan?
In all likelihood, the bank you currently have an account with has the lowest personal loan interest rates available to you. That’s because most banks offer relationship discounts in interest, usually be between 0.25% to 0.5%.
Some banks only offer these discounts to customers with specific accounts — usually with a high minimum deposit amount. Check with your bank’s policies before you apply.
How do lenders set interest rates?
Lenders look at a range of factors when deciding on the interest rate to give a borrower.
- Loan term. Typically, the longer you take to repay a loan, the higher the rate.
- Loan amount. The lowest rates are often available on the highest loan amounts.
- Credit score. You typically need a credit score of at least 760 to qualify for the lowest rates out there.
- Debt-to-income ratio. The lowest interest rates go to borrowers with a debt-to-income ratio below 20%.
- Collateral. If you’re able to back your loan with an asset, like a car or valuables, you can often score a lower rate.
Each lender has its own special formula for setting interest rates. Some might also include your educational history, annual income spending habits and the length of your credit history when coming up with your rate. Some might charge a different interest rate and origination fee depending on how you use a personal loan, like debt consolidation or home improvements.
What is APR?
APR, or annual percentage rate, is the total cost of your loan per year based on your loan balance. It includes both interest and closing costs, like an application or origination fee. This makes it a more reliable indicator of your loan cost than the interest rate alone. But since many personal loans don’t come with any fees, lenders sometimes use interest and APR interchangeably.
Other costs to consider
Your personal loan interest rate isn’t the only expense that you need to take into account. Weigh these other expenses when you compare lenders.
- Origination fee. Some lenders charge a fee of around 1% to 5% of the loan amount at closing. Some deduct this from the funds you receive, while others add it to your loan balance. This is the only fee included in the APR.
- Late fee. Most lenders charge a flat late fee of around $15 to $35 or 5% of the payment due. Most also have a 15-day grace period before the late fee kicks in. This is also not included in the APR.
- Nonsufficient funds fee. Also known as a returned check or returned payment fee, lenders charge this fee if a payment bounces from your account. Typically it’s the same as a late fee, though sometimes it’s slightly higher.
- Prepayment penalty. While rare, a select few lenders charge a fee if you repay your loan early. Usually this is based on how much you would have paid in interest.
Watch out for the monthly payment
Your monthly payments have the most immediate impact on your budget and are arguably the most important cost to consider when you apply for a loan. Monthly payments are based on the amount, rate and repayment term of your loan.
When you apply for a loan, you must show that you consistently have a high enough annual income and low enough debts to cover the monthly payment over the life of the loan. Longer loan terms can give you higher monthly repayments. But that will increase the overall cost of your loan. Go for the shortest loan term you can afford to save on the monthly and total cost.
Compare more personal loan rates
WATCH: How to get the best rate on a loan
Should I get a personal loan?
A personal loan can be useful if it can help you ultimately save in the long run. Here are some common situations where a personal loan can help.
- You have credit card debt. Consolidating your credit card debt with a personal loan can often help you save on interest, since personal loans typically have lower interest rates.
- You need to cover a cost that can’t wait. If you’re moving for a new job, are in need of a new car immediately or need to pay for a medical procedure, a personal loan can help cover those expenses.
- You want to invest in home improvements. Improving your home can help increase the value, which will come in handy if you’re hoping to turn a profit when you to sell.
With the exception of debt consolidation for high-interest or credit card debt, avoid taking out a loan if you have the time to save up.
5 tips to score the lowest rate
From applying with a creditworthy coapplicant to joining a credit union, here are a few ways to up your odds of getting approved for the lowest rate possible.
How to get a low rate on a personal loan
- Apply with a coapplicant. A family member with a good credit score and high income on your application can help you qualify for a low rate.
- Shop around. Prequalify with a few lenders to see which ones offer the lowest rate — often without impacting your credit score.
- Add collateral. Securing your loan with collateral — such as equity in your home — often means lower rates and better terms.
- Sign up for autopay. Many lenders offer an interest rate discount up to 0.5% when you use automatic payments from a bank account.
- Join a credit union. Credit unions often return their profits to members in the form of lower rates and eligibility criteria that’s easier to meet.
Bottom line
The key to getting a competitive rate on a personal loan is comparing lenders. While almost every lender considers your credit score, each has their own method of evaluating your application that could result in a higher or lower rate.
Read our guide to personal loans to learn more about how borrowing works.
Frequently asked questions
Answers to common questions about personal loan rates.
How fast can I get a personal loan with a low rate?
It’s possible to get a personal loan within one business day, though it depends on the borrower and the lender. If there’s anything on your application that lenders might need to take a second look at, like a delinquency on your credit report, that could slow down your turnaround time. Self-employed borrowers, for example, tend to have a harder time getting approved quickly because lenders need to verify that they are likely to have consistent income.
Typically the fastest loans are available online, which often come with higher rates than banks or credit unions. You may need to make a choice between speed and cost if you’re in a pinch.
Is it possible to get a personal loan with a cosigner?
Yes, some lenders allow you to apply with a cosigner to increase your chances of getting approved or qualify for a better rate. But cosigners aren’t as common on personal loans as they are with other types of financing, like car loans or student loans.
Will a personal loan hurt my credit score?
Applying for a personal loan usually hurts your credit score briefly since lenders typically do a hard credit check to help them decide if you qualify. But paying it back on time can help build your credit history and improve your credit score.
If you can, prequalify with the lenders you’re interested in working with before you apply. Make sure that the lender runs a soft credit check that won’t affect your credit score.
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