Best Personal Loan Rates of February 2024 - NerdWallet (2024)

How we choose the best personal loan rates

We use a formula to compare dozens of lenders’ minimum, maximum and average personal loan rates to find the lenders with the lowest annual percentage rates (APRs). We also consider other factors to determine which lenders make this list, including:

» MORE: NerdWallet’s personal loan star rating methodology

NerdWallet’s guide to getting the best personal loan rate

In this article:

How lenders set personal loan rates

Macroeconomic conditions often help personal loan lenders determine their rates. For example, personal loan rates are higher compared to a year or two ago due to changes in the wider economy (like high inflation, Federal Funds rate increases and recession fears) that have prompted lenders to tighten their underwriting standards.

But personal loan rates often have wide ranges, and the specific rate you receive is based primarily on your credit and financial information.

Unlike auto and mortgage loans, personal loans are usually unsecured and not backed by collateral the lender can take if you fail to repay the loan. Instead, lenders rely on your income, outstanding debts and credit history to assign your rate.

The lowest rates go to borrowers with excellent credit, high incomes, little outstanding debt and long histories of on-time loan and credit card payments. Other factors that can influence your rate include education, occupation, the requested loan amount and loan purpose.

What is a good interest rate on a personal loan?

A good personal loan rate is the lowest one you qualify for, which depends heavily on your credit and financial information.

Because rates can vary widely between borrowers, it’s not helpful to compare your rate to someone else’s. Instead, check for loan offers with multiple lenders to find the lowest rate and best terms.

How to get the best personal loan rate

Here are five ways to lower your approved personal loan rate:

Many lenders let you pre-qualify for a personal loan. You provide some information about your credit, income and employment — as well as how much you want to borrow and why — to see your potential loan amount, rate and repayment term.

Because pre-qualifying only triggers a soft credit pull, you can do it multiple times without affecting your credit score. A lender does a hard credit pull if you submit a full application after pre-qualifying.

How personal loan rates affect monthly payments

Use this personal loan calculator to see how different interest rates — plus other factors, like loan amounts and loan terms — can impact monthly personal loan payments.

Personal loan rates by credit score

Here are the average estimated APRs for online personal loans, based on credit score ranges:

Rates for excellent credit

A high income and long credit history showing on-time payments to other creditors will help you get the lowest rates. Excellent-credit borrowers usually get their pick of lenders, including those that offer perks like zero fees and payment flexibility.

Excellent-credit borrowers who pre-qualified for a personal loan through NerdWallet in January received rates from 10.10% to 15.89%, according to aggregate, anonymized data from NerdWallet’s lender marketplace.

Rates for good credit

A good score will help you qualify for a rate on the low end of a lender’s range, but the lowest rates go to those with low debt, high income and a credit history showing accounts in good standing.

Consumers with good credit received APRs from 12.53% to 17.82% when they pre-qualified through NerdWallet’s lender marketplace in January, according to aggregate, anonymized data.

Rates for fair credit

Not all lenders approve borrowers with fair credit scores, and those that do may charge high rates. If you have fair credit, adding a co-signer or joint borrower with better credit and higher income can help you qualify or get a lower rate. You also may have a better chance of qualifying at a credit union if you’re a member in good standing.

Those who pre-qualified for a personal loan through NerdWallet with fair credit in January received rates from 14.51% to 20.35% according to aggregate, anonymized data from NerdWallet’s lender marketplace.

Rates for bad credit

Consumers with the lowest scores may not qualify for a personal loan with a rate below 36%, which is the highest APR most consumer advocates say an affordable loan can have. Requesting a lower loan amount, adding a co-signer or securing your loan could help improve your chances of qualifying.

Bad-credit borrowers who pre-qualified through NerdWallet in January received personal loan rates from 19.10% to 23.51%, according to aggregate, anonymized data from NerdWallet’s lender marketplace.

Personal loan rates by lender type

Personal loan rates from online lenders

Online personal loan rates vary by the type of borrower they target. Bad-credit online lenders may approve borrowers with lower credit scores, but they offer higher APRs to make up for the additional risk those borrowers may carry. Good- and excellent-credit online lenders offer lower rates because they only approve borrowers who they believe have a low risk of defaulting.

Personal loan rates at banks

Banks may offer competitive rates — and rate discounts if you’re already a customer — but they typically have tougher eligibility requirements than online lenders. The average rate for a two-year bank loan was 12.35% in the fourth quarter of 2023, according to the Federal Reserve.

Personal loan rates at credit unions

Credit union loans may carry lower rates than banks and online lenders, especially for those with fair or bad credit, and loan officers may be more willing to consider your overall financial picture.

The average rate charged by credit unions in the fourth quarter of 2023 for a fixed-rate, three-year loan was 10.78%, according to the National Credit Union Administration. Federal credit unions cap personal loan APRs at 18%.

You have to become a member of a credit union to get a personal loan, which may mean paying a fee or meeting certain eligibility requirements.

Frequently asked questions about personal loan rates

What’s the difference between personal loan APR vs interest rate?

APR and interest rate are so similar they’re often used interchangeably, but on personal loans there’s an important distinction. A personal loan APR includes the interest rate plus any origination fee. According to the Truth in Lending Act, all lenders must disclose a loan’s APR before you sign an agreement.

Can you refinance a personal loan to get a lower rate?

If you currently have a personal loan with a high rate, you may be able to lock in a lower rate by refinancing a personal loan, especially if you’ve improved your credit score or lowered your debt since you first borrowed. Some lenders allow borrowers to refinance a personal loan you have with them or a different lender.

If you refinance, be mindful of the new loan’s term. Even with a lower rate, a longer repayment term could mean you’ll pay more overall interest.

Last updated on February 8, 2024

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