Average personal loan interest rate

Personal loans have become more popular over the past decade due to consumers looking to consolidate debt and find lower interest rates than credit cards. According to research by Bankrate, the average personal loan interest rate is 11.08% as of October 7, 2022. However, the rate you receive may be higher or lower, depending on your unique financial situation.

Personal loan rates vary depending on creditworthiness, the lender and the financial stability of the borrower.

Average personal loan interest rate by credit score

Consumers with good or excellent credit can find average interest rates as low as 11.08%, while those with “average” or “poor” credit will pay a significantly higher average rate. Based on Bankrate research, the following chart outlines the average interest consumers pay by credit score.

Credit score Average loan interest rate
720–850 10.73% to 12.50%
690–719 13.50% to 15.50%
630–689 17.80% to 19.90%
300–629 28.50% to 32.00%

However, some borrowers will get much lower interest rates because they are averages.

Average loan rates by type of lender

While local banks and credit unions with physical stores promise competitive personal loan products, online lenders often offer loans with lower starting interest rates for consumers with excellent credit. Consumers who want to find an affordable loan product that suits their needs should compare the offers from their bank or credit union with those of any online lender they may be familiar with.

Rates are accurate as of September 14, 2022. Check with lender for updated details.

Average personal loan rates by online lender

Average personal loan rates by banks

Bank Loan interest rates
Citibank 9.99% to 23.99% (with automatic payment)
Citizens Bank varies by location
Discover 5.99% to 24.99%
Santander Bank 6.99% to 24.99% with ePay
American bank 8.24% to 20.24% (with automatic payment)
Wells Fargo 5.74% to 20.99% (with automatic payment)

Average Personal Loan Rates by Credit Union

Loan interest rates
PenFed Credit Union 7.74% to 17.99%
1st Federal Credit Union Members From 10.99%
Federal Naval Credit Union 7.49% to 18.00%
USAA up to 18.51%

Other factors that affect your personal loan rate

Although your credit score plays an important role in the average interest rate you can qualify for, lenders consider other details to assess your creditworthiness. These include:

  • Your Income is used to determine how much you can borrow.
  • Your debt to income ratio helps lenders determine how much debt you already have relative to your income.
  • Your employment status helps lenders feel confident in your ability to repay your loan.
  • Your term of the loan can impact your rate: short-term personal loans tend to have higher interest rates than long-term personal loans.

Some lenders set minimum standards for their loans, such as a minimum income amount or a minimum credit score. You may also not be able to get approved for a personal loan if you have recent bankruptcy on your credit report or an open collection file. Before applying for a personal loan, it may be worth checking your lender’s FAQ pages to see if you will be able to qualify.

Documentation you can expect to provide when applying for a personal loan includes photo ID, employer and income verification, such as pay stubs and bank statements, and proof of address. .

What is a good interest rate on a personal loan?

A good interest rate on a personal loan can be different for everyone. Generally speaking, a good rate is lower than the average personal loan rate, which currently sits at 10.7%.

How to get a good personal loan rate

If your goal is to qualify for a good personal loan rate, or at least the best loan rate you can hope to qualify for based on your credit score, income, and other factors, you can take many measures now. Here’s an overview of everything you need to do to get a loan you can afford:

Work to improve your credit score

When you apply for a personal loan, a lender looks at your credit score to determine the level of risk you might pose to a borrower. In general, the higher your credit score, the better your chances of receiving the lowest possible rate.

The most important step to improving your credit score is paying all your bills early or on time – payment history accounts for 35% of your FICO score. You can also pay down debt to lower your credit utilization ratio, which is 30% of your FICO score.

Additionally, removing inaccurate information from your Experian, Equifax, or TransUnion credit reports could improve your score. To monitor errors for all three reports, visit AnnualCreditReport.com. If you find any errors, dispute them with the respective credit bureaus.

Shop around and compare lenders

Getting a good personal loan rate also involves shopping around. Different lenders offer different rates to applicants based on their unique underwriting guidelines. This means that applying for a personal loan from a lender that offers the lowest rate does not guarantee you will get the lowest rate available.

To increase your chances of finding the lowest rate, prequalify with as many lenders as possible. Pre-qualification allows you to get an estimate of the interest rate you might receive when you submit a formal application, and it often has no impact on your credit score.

Check fees

Remember that the interest rate on your loan is not the only personal loan expense to be aware of. You should also check other fees such as origination fees, which can be up to 6% of your loan amount. To do this, look at a lender’s annual percentage rate, a measure that includes interest and fees. Some lenders will give you an estimated APR when you prequalify.

The bottom line

Average personal loan interest rates can vary depending on your credit score and other factors, but you have some control. Make sure to keep your credit score in the best possible shape and work on paying down your debts to lower your debt-to-income ratio. By taking care of your financial health and comparing typical loan interest rates, you’ll have a personal loan that suits your budget and goals at your fingertips.

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