Average Personal Loan Interest Rates

When you get a personal loan, odds are you’ll pay back more than you borrow. You can thank interest for that.

Interest is the cost of borrowing money, and interest rates determine how high that cost goes. That’s why interest rates are one of the most important elements of a personal loan, and when you understand the impact of the interest rate, you’re better equipped to make sound financial decisions.

Keep reading because we’ll cover average personal loan interest rates, how interest rates affect your bottom line, and—perhaps most important—how to find the best rates available.

Average personal loan interest rate by credit score

Borrowers’ credit scores influence interest rates more than any other factor. The table below shows the average personal loan rates, according to 2023 data, for each of the credit score ranges:

Credit score	Average rate*
720 – 850 (Excellent)	11.30%
690 – 719 (Good)	15.60%
630 – 689 (Fair)	22.30%
300 – 629 (Poor)	25.20%

As you can see, borrowers with the highest credit scores often qualify for the lowest interest rates. 

Lenders tend to see borrowers with higher scores as more dependable. They’re confident those borrowers will repay their loans as agreed. In turn, they offer these borrowers lower interest rates.

However, lenders are less sure that borrowers with less-than-stellar credit scores will repay their debt. To account for that added risk and to ensure that they recoup as much of their loaned funds as possible, lenders give these borrowers higher interest rates.

Average personal loan interest rate by lender

Your credit score isn’t the only interest rate predictor. Your interest rate also depends on your lender. If you borrow from a lender with lower overall rates, you stand a better chance of qualifying for a competitive rate yourself.

Here’s a look at several personal loan lenders and marketplaces, along with the rate ranges they offer:

Lender	Rate range (APR)
Credible	7.49% – 35.99%
LightStream	7.49% – 25.49%
SoFi	8.99% – 29.99%
Upgrade	8.49% – 35.99%
Upstart	7.80% – 35.99%
Happy Money	11.72% – 17.99%
Achieve	7.99% – 35.99%
Best Egg	5.99% – 29.99%
LendingPoint	7.99% – 35.99%
Discover	7.99% – 24.99%
American Express	6.98% – 19.98%

The ranges are similar, but you might notice variations between several of them. 

The similarities you see are due to something called the prime rate, which was 8.50% as of March 2024. Put simply, the prime rate is what lenders use as a benchmark or a starting point for setting their own interest rates.

And that’s where the differences come in. Even with the prime rate acting as a guide, lenders can indeed establish rates as they see fit, and the prime rate isn’t all they consider. Lenders’ criteria could also include:

• The risk assessment model they use
• Competitors’ interest rates
• Credit profiles of borrowers they cater to
• How loan interest affects their profit

Lenders are unlikely to reveal the specific numbers that determine their rate ranges. But knowing what those ranges are and what might influence them can help you make more informed decisions when it comes to evaluating potential lenders for your personal loan.

What else affects my personal loan interest rate?

Aside from your credit score and lender of choice, several other factors affect your personal loan rate, including:

• Your repayment terms. Stretching out your loan term can lower your monthly payments, but you will pay more in interest over the term, and the longer repayment periods are riskier to lenders. They might raise your interest rate as a result. 
• Your debt-to-income ratio (DTI). Having a good credit score can only get you so far if you’re already bogged down with debt. Depending on how much debt you’re carrying, you may not qualify for as low a rate as you’d like on your personal loan.
• Whether you have collateral. If you can secure your personal loan with a home or vehicle, you could lower your interest rate.
• Your income. Debt or no debt, lenders want to see enough money left at the end of the month to cover your payments. If you still have excess monthly cash after adding in your new loan, you might qualify for a better interest rate.
• Your education. Some lenders, such as Upstart, consider your academic achievement when determining your interest rate. Not having a formal education won’t hurt you, but holding an associate degree or higher could help.
• Any negative marks on your credit report. It’s possible to have a high credit score without having perfect credit. But if your credit imperfections are due to missed payments or recent collections, your personal loan rate is more likely to be on the higher end.

Lenders weigh this information differently, but these elements work together to give lenders a better idea of your financial resources and decision-making over time. They also provide lenders insight into your borrowing habits and what those habits might look like in the future.

Your credit score can measure how effective your money management is, but it’s just the title page of your financial story. Lenders want to read the whole book.

What is a good interest rate for a personal loan?

Like average interest rates, what constitutes a “good” interest rate varies by credit score. A good rate for a borrower with a 620 credit score might not be a good rate for someone with an 800.

Your ideal interest rate will be lower than the “average” for your credit score listed above. If you’re offered a rate that’s higher than average, shop around with other lenders before signing on the dotted line. 

Going through this prequalification process will tell you:

1. The range of interest rates you can expect for your individual credit situation
2. Which lenders can offer the best terms and which can’t
3. How confident you can be that you’re getting a good rate

Imagine, for example, that you prequalify with four different lenders and each of them offers you a rate between 15% and 18%. 

If your credit score is in the low 700s, you may consider these rates reasonable. Since this is a narrow range that hovers right around your score’s average rate of 15.60%, you can be reasonably confident that 15% is a good rate for your score.

However, if your credit score is closer to 750, you might do better if you continue rate shopping. The average rate for a 750 score is 11.30%, which is far below what these lenders offered. The best rate you’ve seen so far might be 15%, but it’s likely not the best rate you can find.

In the latter case, you’d be wise to check your rates with additional lenders. Prequalifying doesn’t affect your credit, so get loan offers from as many lenders as it takes, starting with those that allow prequalification, to find the lowest interest rate available.

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How does my interest rate affect my personal loan cost?

As your interest rate climbs, so does your loan’s overall cost. Remember that interest is the price you pay to borrow money. A higher interest rate means a higher price tag.

Consider our last example. If your credit score is 750, the average interest rate for your score is 11.30%. You want a $10,000 loan with 36-month terms. The lowest rate you’ve found so far is 15%. Here’s how those different interest rates would affect your borrowing cost:

This is why diligent rate shopping is crucial to saving the most money. You might be tempted to take that 15%, but it’ll cost you $643 in added interest over the life of your loan. That’s roughly the equivalent of two monthly payments just to cover the added interest.

As you prequalify with various lenders, use our personal loan calculator to measure the true cost of their loan offers. You can quickly compare how different interest rates will affect your monthly payments, your interest expense, and the total cost of your personal loan.

It’s also important to consider how personal loan fees and interest work together to increase your borrowing cost. Depending on your lender, the size of your loan, and your credit, you might see any or all of the following charges:

Fee	Avg. cost
Application fee	1% – 8% of your loan amount
Origination fee	1% – 10% of your loan amount
Prepayment penalty	1% – 2% of your loan amount
Late fees	$10 – $100, or a percentage of your monthly payment

Some of these, like late payment fees, are easier to avoid than others. You may not be able to get around origination or application fees. And if those fees are rolled into your loan, you’ll pay interest on your principal balance and on the added costs.

How do you qualify for the best personal loan interest rate?

To qualify for the best interest rates (and save the most money), your credit needs to be in decent shape. If you don’t need the personal loan for an emergency, be patient and take time to make these credit improvements:

• Pay down your credit card balances.
• Catch up on late payments.
• Dispute incorrect information, especially if it’s hurting your score.
• Avoid unnecessary hard inquiries or taking on new debt between now and when you apply for your personal loan.

Our expert’s recommendation to improve your credit score

Erin Kinkade

CFP®

I recommend making a plan to pay down your debt and to ensure you’re making consistent, on-time payments. I also recommend reviewing your credit reports from all three credit bureaus and disputing any errors. If you feel overwhelmed and don’t know where to begin, I recommend engaging a debt counselor, financial professional, or trusted family member or friend who’s familiar with strategies to improve credit scores. In addition, a simple recommendation is to avoid applying for loans or credit cards during the period you’re working to improve your score.

Working on your credit isn’t the only way to get approved at a low rate. You can also:

• Find a co-applicant or cosigner. Applying for a personal loan with a co-applicant or cosigner can boost your odds of getting a low rate. If you have a trusted friend or relative with better credit or a higher income, prioritize lenders, including LightStream and Upgrade, which let you apply with another person.
• Put up collateral. You might get a better interest rate if you secure your personal loan with assets such as a car or house. You risk losing ownership of your collateral if you default, so only use this option if you’re sure you can pay back your loan as agreed.
• Use rate discounts. A low-pressure, low-stakes way to lower your interest rate is to take advantage of rate discounts. Wells Fargo and M&T Bank both have relationship discounts for banking customers, and SoFi will reduce your rate if you enroll in autopay.

Even if your credit isn’t perfect, you could use these strategies to lock in a low rate. Research your options and work with your lender. You might qualify for a better rate than you think.