Best low-interest personal loans

Excellent credit borrowers, those with FICO scores above 800, can find personal loans with low interest rates from top lenders, and we have tips for borrowers with less-than-perfect credit as well. If you can wait to borrow, we'll also cover when interest rates may come down and how to improve your credit in the meantime.

Compare the best personal loans with low interest rates

Best low-interest personal loans

Personal loans have lower interest rates than many other forms of borrowing, including credit cards - the average personal loan rate is almost 10 percentage points lower than credit cards, at 11.92%, compared to 21.51%, according to the Federal Reserve. But personal loan rates are still higher than they've been in more than a decade, making it crucial to find the lowest rate you can qualify for.

SoFi: Best overall

Upgrade: Best for fair credit

Discover Personal Loans: Best for high close rates if pre-approved

LightStream: Best home improvement loans and low rates

Best Egg: Best for high close rates if pre-approved

Upstart: Best fast personal loans for all credit types

Zable: Best for short-term loans and same day funding

Methodology

We evaluated the best loans for good credit based on customer experience, minimum fixed rates, maximum loan amounts, funding times, loan terms, fees, discounts, loan uses, and other factors. Our team of experts gathered information from each lender's website, customer service department, directly from our partners, and via email support. Each data point was verified by a third party to make sure it was accurate and up to date.

Read our full lender rating methodology for more information.

What is a low interest rate for a personal loan?

Interest rates tend to fluctuate due to the actions of the Federal Reserve in response to the economy. Therefore, a "low interest rate" is a relative term. A two-year personal loan with an interest rate below the 11.92% average can be considered a low-interest personal loan.

Some lenders are currently advertising personal loan rates as low as 6.99% APR for applicants with the strongest credit profiles. The annual percentage rate (APR) reflects both the interest rate and upfront loan fees, so it's the best figure to use when comparing personal loans.

But not everyone will have access to the lowest rates, so it's best to look for a low-interest loan relative to your individual financial situation. Check out the table below to see average rates by credit score.

Average personal loan rates by credit score

The most accurate way to find the lowest interest rate is to prequalify with multiple lenders, but you can also refer to the average personal loan rates by credit score as a benchmark for what to expect.

The table below shows the average personal loan interest rates for three and five-year loans by credit tier. These average personal loan rates are based on prequalified rate data for borrowers using the Credible marketplace in July of 2024.

When will personal loan rates go down?

Outside of individual factors in the pool of personal loan borrowers, average personal loan interest rates are most dependent on the federal funds rate, which is the rate banks use when lending money to one another. When the federal funds rate is high, lenders pass on the cost to consumers through higher interest rates on credit products, such as personal loans.

When the Federal Reserve cuts the federal funds rate, average personal loan interest rates may follow. But no one, including the Federal Reserve and knowledgeable economists, knows exactly when interest rates will go down. That said, we can make some educated guesses.

Will the Federal Reserve cut interest rates in 2024?

A high federal funds rate is the best tool the Fed has for controlling inflation and inflation has remained stubbornly high for most of 2024. Fortunately, June CPI  data came in much lower than expected, which makes it more likely that the Fed will make at least one 25 basis point rate cut by the end of the year, which is a ¼ percentage point cut. June PCE data was also encouraging and it's possible a cut make come as soon as September. We should learn more from the Fed's meeting next week.

How to qualify for a low-interest loan

To get approved for a personal loan with a low interest rate, you'll first need to meet the lender's personal loan requirements. While each lender has its own minimum requirements, you'll generally need at least fair credit (a FICO score between 580 to 669) and enough income to manage your debts.

However, meeting the minimum requirements for a personal loan won't qualify you for the lowest interest rates. The lender will also want to see indicators of positive financial health. Several factors affect personal loan rates, including:

• Your credit score and payment history: Payment history accounts for the largest portion of your credit score (35%). An excellent credit score and on-time payment history are necessary to qualify for the lowest interest rate.
• Your income and employment history: A high income and stable employment history will improve your chances of getting a low-APR personal loan.
• Your debt-to-income ratio (DTI): If your debt balances are low relative to your income, the lender will be more likely to view you as a low-risk borrower and offer you a low interest rate. DTI is determined by dividing all monthly debt payments by your gross monthly income.
• The loan amount: Some lenders charge lower interest rates on higher loan amounts. However, you should never borrow more than you need to get a lower rate.
• The repayment term: Shorter repayment terms often come with lower interest rates, so you should choose the shortest repayment term with a monthly payment you can comfortably afford. It's better to continue making on-time payments than having the shortest term.

Even if you don't check all the boxes, there are a few steps you can take to potentially reduce your personal loan interest rate, including:

• Compare lenders: Each lender evaluates borrowers a little differently, so you might get a lower rate offer from one lender than another. Most lenders offer a prequalification process you can use to get a rate estimate without hurting your credit. However, prequalification is not an official offer of credit and your rates may vary once you formally apply.
• Take advantage of discounts: Many lenders offer an autopay discount. You may also qualify for a relationship discount if you have an existing loan or banking account with the lender.
• Secure the loan: Some lenders offer lower rates to borrowers who offer an asset as collateral. Just keep in mind that the lender can seize the asset if you fail to repay the loan.
• Apply with a cosigner or co-borrower: Some lenders allow borrowers to apply with a cosigner or with a co-applicant. When evaluating the application, the lender will consider both applicants' credit scores and income, so if you apply with a family member who has excellent credit, you'll improve your chances of getting a low interest rate. However, your cosigner is on the hook if you fail to make payments, which could potentially damage your credit score as well as theirs.

Where to get a low-interest personal loan

You can get a low-interest personal loan from a bank, credit union, or online lender. When deciding where to get a personal loan, consider whether you currently have an account with a credit union or bank that offers a relationship discount. However, don't assume that the discounted rate will be the lowest rate you can get. Make sure to compare rates with online lenders, which may offer lower rates due to lower overhead costs and innovative underwriting processes.

Which bank has the lowest interest rate on a personal loan?

Some people value face-to-face customer support and would rather apply for a personal loan at a brick-and-mortar bank. Some banks with low interest rates include:

You can also get in-person service at a credit union, but you'll need to apply to be a member. Several credit unions offer personal loans with low interest rates, including:

How to apply for a personal loan

1. Check your finances: Access your free credit report at AnnualCreditReport.com, taking note of your score. Be sure to look for common errors and dispute any that could be affecting your score. Then, evaluate your budget to determine how much you can afford to spend on loan repayment.
2. Research lenders: Determine which lenders you can qualify for and narrow down your options to the lenders that offer the lowest rates and fees. Consider discounts as well.
3. Prequalify: Most lenders can offer a rate estimate with just a soft credit pull. You'll need to enter your Social Security number and answer a few questions. If you have excellent credit, you may also want to apply with Lightstream. The lender doesn't offer pre-approvals but advertises low interest rates and no fees.
4. Choose a low-interest lender: Compare the rates and terms of each loan estimate. Choose the lender that best meets your needs and proceed with the application. This will trigger a hard credit check which may temporarily lower your score.
5. Complete the application: Upload any requested documents, such as proof of income, proof of employment, and proof of identity.
6. Sign your loan documents: Review the terms of the agreement carefully. Then, sign your loan documents to initiate the transfer of funds.

Alternatives to low-interest personal loans

Personal loans offer many benefits, including fast funding and flexible repayment terms. Most lenders don't charge prepayment penalties, and some don't even charge late fees. However, a personal loan might not meet your needs, and you may be able to get a lower interest rate with other financing options, including:

• 0% APR credit card: Many credit card companies offer a zero-interest introductory period for new cardholders. However, you should ensure you can afford to make the minimum payments and pay off the full balance before the promotional period ends, or you could pay a high interest rate on the remaining debt when the APR adjusts.
• Home equity loan or HELOC: If you're a homeowner, you may be able to use a home equity loan or home equity line of credit to borrow against the equity you've built in your home (up to 80% or more of available equity). Because your home acts as collateral, you may get a lower interest rate when compared to a personal loan. However, you'll also need to pay closing costs and you may wait weeks or months to get the funds.
• 401(k) loan: If your plan sponsor allows loans, you can borrow from your retirement account. 401(k) loans come with low interest rates similar to other secured loans, and the interest goes toward your retirement savings. However, there are risks to depleting your 401(k) account, and the entire balance could become due if you change jobs. We recommend falling back on your 401(k) as a last resort.

FAQ

What is a good interest rate on a personal loan?

Personal loan rates vary with market conditions. The current average fixed interest rate on a 2-year personal loan is 11.92%, according to the Federal Reserve. Any rate below that is a good interest rate for a personal loan. You can also check the table in this article to find a benchmark for different credit scores and loan terms.

How much of a personal loan can I get?

Many lenders offer personal loans in amounts up to $50,000 or $100,000. BHG even offers personal loans up to $200,000. However, the amount you'll qualify for depends on your credit score, income, current debt, and other factors.

How can I improve my credit score?

Paying down debt and making on-time payments every month will improve your credit score over time. Asking for a credit limit increase may improve your score as long as you don't rack up more debt, as can becoming an authorized user on a trusted friend or family member's credit card.

You can also prevent damage to your score by refraining from closing old credit card accounts or applying for new credit. A tool like Experian Boost may help you achieve a small credit score increase immediately, as long as you've been responsible with your bills.

Can I get a low-interest personal loan with bad credit?

No. If you have bad credit, you'll likely pay an above-average interest rate on a personal loan. However, you can still take steps to get the lowest possible rate for your credit score, including comparing lenders, applying with a cosigner, securing the loan, and taking advantage of discounts.