Average Personal Loan Interest Rates
The average annual percentage rate on a personal loan ranged from 9.30% to 22.16% in April 2021.
Actual personal loan interest rates will vary based on how creditworthy you are, the length of the loan, the loan amount and the lender.
Here we compile the average rates on unsecured personal loans, grouped by credit score and lender.
Average personal loan interest rates by credit score
Your credit score will be one of the largest factors in determining the annual percentage rate (APR) on a personal loan.
In general, the higher your credit score, the lower the rate will be.
Individuals with excellent credit, which is defined as any FICO credit score between 720 and 850, should expect to find personal loan interest rates at about 9% to 13%, and many of these individuals may even qualify for lower rates.
However, if you do have an excellent credit score, you may want to consider a 0% balance transfer credit card instead of a personal loan, as you can save money on interest.
Credit Score | Average Personal Loan APRs |
|---|---|
| 760-plus | 9.30% |
| 720-759 | 13.32% |
| 680-719 | 17.82% |
| 640-679 | 22.16% |
| Rates as of April 2021 |
For individuals with average to poor credit, APRs on personal loans will generally approach the higher end of lenders’ advertised APR ranges, which sometimes approach or eclipse 30.00%. If you have a credit score of less than 580 or no credit history, you may have trouble qualifying for a conventional personal loan altogether.
However, this doesn’t mean you should turn to payday loans, which can carry APRs in excess of 100%. Those loans make it all too easy to fall into a cycle of never-ending debt. Instead, consider going for a loan or financial aid to a local credit union or nonprofit financial assistance organization.
Personal loan interest rates by lender
Interest rates on unsecured personal loans typically range between 5% and 36%.
Banks and credit unions will offer competitive personal loan rates, but some of the lowest you can find are from online lenders, especially those that cater to creditworthy borrowers.
If you have a lower credit score, you will also have more luck with online lenders, as some will accept borrowers with scores as low as 580, and sometimes lower. In the table below, we take a look at the rates offered on an unsecured personal loan by a variety of online and traditional lenders.
Lender/Lending Platform | APR |
|---|---|
| Alliant Credit Union | 6.49% - 10.49% with AutoPay |
| Avant | 9.95% - 35.99% |
| Best Egg | 5.99% - 29.99% |
| Citibank | 7.99% - 17.99% with discounts (rate may be higher) |
| Citizens Bank | 7.99% - 20.89% with AutoPay |
| Discover Personal Loans | 5.99% - 24.99% |
| E-LOAN | 8.99% - 10.49% |
| FreedomPlus | 7.99% - 29.99% |
| LightStream | 2.49% - 19.99%* |
| Happy Money | 5.99% - 24.99% |
| SoFi | 5.74% - 20.28% (with all discounts) |
| Upgrade | 6.94% - 35.97% |
* w/autopay
What is considered a good interest rate on a personal loan?
A good interest rate on a personal loan varies depending on what the loan is being used for, the loan balance and the loan term.
Unfortunately, you may not qualify for the best personal loan interest rates that a lender offers but keep in mind that the average rates ranged from about 9.00% to 22.00% in the spring of 2021.
You should apply to multiple lenders to see what personal loan rates you can qualify for based on your credit history and compare your offers to find a good interest rate.
If the rates you receive are too high and you won't be able to pay back the loan with interest, consider other options or wait until you improve your credit score to apply for the loan.
Who has the best personal loan interest rates?
Currently, LightStream is offering some of the best personal loan interest rates.
However, it still may not be the best option for you, especially if you don't have a cosigner. To find the best personal loan lender for your situation, do some comparison shopping before deciding to take out a personal loan.
Your personal loan interest rates will depend on your credit score and other financial history. Each lender is different with various types of loan offerings and ways to evaluate a potential borrower.
Other factors that affect your personal loan interest rate
Lenders will look at a variety of data points when making a decision about whether to extend a loan to you. Chief among these are:
- Your credit score and history
- Employment status
- Debt-to-income ratio
Your credit score will be one of the largest factors in determining whether you can qualify for a personal loan. In fact, many lenders have strict credit score cutoffs. For credit history, lenders may look at:
- the length of your credit history
- the number of negative marks in recent years
- the number of credit inquiries you’ve had in the past year
Many lenders will want to see a credit history of at least one to two years.
Another factor lenders consider is your employment status and history. Some lenders will require that you provide proof of income, whether through full- or part-time employment or self-employment. Other lenders may also require a minimum personal or household annual income to apply, with these minimums frequently between $20,000 and $40,000. If the lender has these requirements, you’ll need to provide documentation as proof of your employment and income, such as...
- Tax returns
- Pay stubs
- W-2s
Debt-to-income (DTI) ratio is another important measure lenders use to evaluate applicants. That’s the amount of debt, including housing payments, you carry relative to your pretax monthly income.
For example, if your pretax monthly income is $4,000, and your total debt payments are $1,200 per month, your DTI ratio would be 30%. In general, lenders will want to see applicants with DTI ratios under 45%, and in some cases under 35%.
A DTI ratio of 50% or higher is a bad sign to lenders, as it means you may have trouble paying back your debts (and thus may default on the unsecured loan you’re applying for).
Finally, the length and amount of the loan will also affect your interest rate.
Longer terms and higher loan amounts will typically translate to higher APRs. This is because there is a higher risk that you won’t pay back the loan if you borrow a lot or if you plan to repay the loan over a long period of time.
Using a personal loan calculator to weigh interest rates
If you’re ready to shop around for personal loan interest rates, it’s wise to keep a personal loan calculator handy. After all, your quoted APR determines your monthly payment. You can use a free online tool to estimate your monthly dues for each potential rate.
You can also employ personal loan calculators to determine your ideal loan repayment term. You might opt for a longer term at the expense of a slightly higher APR, for example, if it keeps your monthly payments in line with your cash flow.
In other words, personal loan rates are a key factor in determining which loan is best for you, but they’re far from the only factor to consider. Talk with lenders about repayment terms and protections as well as discounts and fees before choosing the best overall loan for your situation.