Personal loan interest rates are near all-time lows — get one now

Improve your chances of approval by taking these steps.

If you’re in a pinch and need money fast, you may want to consider taking out a personal loan. Personal loan interest rates are near all-time lows. And they offer flexibility — you can apply for various loan amounts and use the funds at your discretion.

Finding the best personal loan lender and a personal loan rate that fits your needs, however, will take some digging. Fortunately, online marketplaces like Credible make the process easier. With Credible, you can compare rates and find an online lender within minutes.

As you start the process of comparing rates and term lengths, you may want to understand why personal loan interest rates matter and why now is a good time to get a personal loan.

What is a good interest rate on a personal loan?

Typically, a good interest rate on a personal loan is below the national average — currently, that's around 9.5%. But that number fluctuates.

For example, interest rates were at 9.5% for a 24-month personal loan from a commercial bank in May 2020, according to the Federal Reserve. In May 2019, the average rate was 10.63%.

The coronavirus pandemic prompted the government to cut the federal funds rate near zero in March 2020 to help the economy. This move impacted how banks set the terms on their fixed interest rate and variable interest rate loans.

According to Credible, personal loan interest rates currently range from 4.99% to 35.99%. But with Credible's free online tools, you can find different term lengths and rates from 4.99% APR in just 2 minutes. Checking rates won't affect your credit and there are no hidden fees.


How do I get approved for a personal loan?

Unlike a car or home loan, personal loans are unsecured, and lenders will look closely at certain financial factors in making their approval decision and setting the terms for your loan. Boost your chances of having your loan application approved by improving these three things:

  1. Credit score
  2. Credit history
  3. Debt-to-income ratio (DTI)

1. Credit score: One of the most critical factors will be your credit or FICO score, which measures your financial past and helps lenders assess their risk in lending you money. Lenders prefer borrowers with higher scores. A good credit score will range from 700 to 749, and an excellent score is 750 and above. Borrowers with fair credit, which is a score that ranges from 640 to 699, may still be approved but will likely pay a higher interest rate.

For a personal loan of $100,000 or more, you’ll likely need to have a credit score of at least 720. To see if your credit score is good enough to qualify for a personal loan, simply enter your estimated credit score into Credible's free tools, along with your loan amount.

2. Credit history: Your credit score is partially based on your credit history. A credit score is assigned by one of three credit reporting bureaus and is calculated based on your payment history, amounts owed, length of credit history, credit mix, and new credit. 

3. Debt-to-income ratio (DTI): Another factor that a lender will consider is your debt-to-income ratio. This ratio is calculated by adding your total debt payments, including credit card bills, auto, and student loans, mortgage payments, and personal loans, and dividing the number by your gross monthly income. Lenders prefer borrowers who have a DTI of less than 40%, which indicates that they can take on an additional payment without too much strain on their monthly budget.

Before you apply, you can use a personal loan calculator to determine the monthly payment a personal loan would create, calculate your DTI, and assess its impact on your budget.


Why should I get a personal loan?

Personal loans offer more flexibility than other types of loans that you take out for a specific purpose, such as buying a car or home. In fact, borrowers may have a variety of reasons for considering one, such as:

  • Debt consolidation
  • Large purchases
  • Unexpected bills (medical or car bill)
  • Home improvement project

Personal loan interest rates can be lower than other types of financing. For example, the average credit card interest rate is 14.52%, according to the latest figures from the Federal Reserve, making a personal loan a more affordable way to finance a purchase.

Make the best choice for your unique situation by visiting a site like Credible to explore your personal loan options and to locate the best personal loan rates.


Another reason a personal loan can be attractive is that most are unsecured and don't require any collateral, which can be helpful during an uncertain economy. While interest rates for a home equity line of credit may be lower than rates on a personal loan, depending on your credit history, you put your home at risk if you cannot make a payment. 

A personal loan is also a suitable type of borrowing vehicle if you are trying to build or repair your credit score. As long as you make your payments on time and don't negatively impact your DTI, you can improve your FICO score over the term of the loan, making future borrowing easier and more affordable.

The bottom line on personal loans is this: When used responsibly, they can help borrowers by providing needed funds at a low-interest rate. The most crucial step is to make sure you can repay the loan. Use a personal loan calculator to determine the personal loan monthly payment, then consider how it would affect your budget.