What Is a Good Interest Rate for a Personal Loan?
Written by: Timothy Moore, CFEI®
Edited by: Kristen Barrett, MAT
Reviewed by: Michael Menninger, CFP®
A good rate for a personal loan is between 11.26% and 13.31% for three-year loans or 15.34% and 18.30% for five-year loans. Those are the average rates for borrowers with very good or exceptional credit.
You’ve probably seen lenders advertise personal loan rates far below these (as low as 5.99%, currently), but those are the absolute lowest rates possible. Most borrowers, even those with excellent credit, won’t qualify for the lowest rate. Getting a rate within the average for someone with very good or exceptional credit means you’re already ahead of the curve!
What’s a good APR for a personal loan by credit score?
Some of the best personal loans advertise rates as low as 5.99%, but many have rates that climb as high as 35.99%. So how do you know if you’re getting a good rate for a personal loan?
The easiest way is to look at the average rates people get at each credit score level. If you’re offered a rate within the range for your score (or better than the range), congratulations: That’s a good rate for your personal loan.
| Excellent (800+) | 11.26% – 15.34% |
| Very good (740 – 799) | 13.31% – 18.30% |
| Good (670 – 739) | 19.88% – 23.34% |
| Fair (580 – 669) | 29.35% – 30.90% |
Average personal loan rates by lender
Lenders use a wide range of data points, including credit score, income, debt-to-income ratio, and loan size, to determine whether they’ll approve you for a personal loan, and at what rate. Each lender has its own set range of rates, meaning it has defined the absolute lowest and highest rates any borrower could qualify for.
You should carefully choose a personal loan lender, considering loan size, terms, customer reviews, and more. However, choosing the lender with the lowest rate is often the right call.
The table below shows current rates from some of the top lenders, including Upstart, SoFi, and LendingClub, as well as their funding amounts and minimum credit score requirements. We’ve also included rates for two of our top-rated online loan marketplaces, Credible and LendingTree.
Personal Loan Limit: How Much Can I Borrow?
"Important: Make sure you realize how much extra interest you’ll pay over the life of the loan. Are fees clearly explained? Do prepayment penalties apply? Also, be sure you’re clear on how your credit score affects interest rates and the additional interest costs over the life of the loan." - Michael Menninger, CFP®
6 ways to get a good rate on a personal loan
Lenders look at your credit score, income, debt-to-income ratio (DTI), and loan amount when setting your rate. Here’s how to improve your odds:
1. Improve your credit score
This isn’t an overnight solution, but if you can wait a few months before applying, there are several ways to improve your credit score.
Paying your bills on time, lowering credit card balances, and correcting credit report errors can all help. Even moving from “fair” to “good” (FICO 670 to 739) credit can significantly reduce your APR.
2. Lower your debt-to-income ratio
Most lenders prefer a DTI below 36% (some allow up to 43%). You can lower DTI by paying down debt or increasing income.
3. Ask about discounts
Most lenders offer a small rate discount (usually 0.25%) when you enroll in automatic payments. While this may seem small, it can save you a significant amount over the life of the loan.
Some lenders may offer additional rate discounts. KeyBank, for instance, offers a 0.75% relationship discount for having a KeyBank Relationship Account. LightStream offers a Rate Beat program; if you qualify for a lower rate with another lender, LightStream will beat it by 0.10%.
4. Choose the shortest term
Lenders offer better personal loan rates on short-term loans because they pose a lower risk to them. Choose the shortest term you’re comfortable with, keeping in mind that shorter repayment terms mean larger monthly payments.
Use our personal loan calculator to see how adjusting a loan term can affect your monthly payments.
5. Get a joint loan
Some lenders allow you to apply for a personal loan with a co-borrower. A co-borrower inherently reduces the risk of missed payments or default (since there are two incomes backing the loan), so lenders typically offer better rates on these loans.
Not every lender allows co-borrowers on personal loans. Limit your search to these best joint personal loans if this is the right path for you.
6. Get a secured loan
Personal loans are typically unsecured, meaning there’s no collateral backing them in the way an auto loan is secured by the car or a mortgage is secured by the house. This presents more risk to the lender.
However, some lenders have secured personal loans for borrowers with fair or poor credit. By putting your car, valuables, or even investment accounts up as collateral, you lower the risk for the lender and thus lock in a better rate.
Just be careful: If you default on a personal loan secured by collateral, the lender can seize your property.
How personal loan rates compare to alternatives
Personal loans aren’t your only option to get money for a wide variety of purposes. Assuming you qualify, you can also turn to options such as home equity loans and credit cards. Though payday loans are easy to get, we never recommend them.
What Is the Maximum Personal Loan Amount You Can Get?
"I have never personally applied for a personal loan, but when I see really low rates, I know there must be a catch. Maybe it’s a teaser rate that goes up, or fees are separate from the rate. Otherwise, the lender may be seeking a nearly perfect credit score and virtually 0% DTI." - Michael Menninger, CFP®
Should I still get a personal loan with a bad rate?
The short answer: If you have an emergency and need money fast, accepting a personal loan with a high rate might still be a better option than swiping a high-interest credit card, and it’s definitely better than taking out a payday loan.
If your need is less urgent, it’s probably worth waiting until you can get a personal loan with a good rate.
