Best Personal Loan Rates of July 2024

NerdWallet reviewed more than 35 financial institutions to find the best rates on personal loans. These are our top picks.

A personal loan’s annual percentage rate (APR) represents the cost of the loan and includes the interest rate plus any other fees a lender charges, like an origination fee. Your personal loan interest rate and APR may be the same number if there are no loan fees.

Because these loans usually don’t require collateral, such as a house or car, your personal loan rate depends heavily on your credit and financial information.

A good personal loan rate is the lowest one you qualify for. APRs are typically between 6% and 36%, which is a wide range compared to other types of loans like mortgages and auto loans. Because rates can vary widely, it’s not helpful to compare your rate to someone else’s. Instead, pre-qualify for personal loans with multiple lenders to find the lowest rate and best terms. This process doesn’t require a hard credit pull, so it’s a low-risk way to determine which lender could offer you the best rate.

Macroeconomic conditions help personal loan lenders determine their rates. For example, changes in the wider economy (like high inflation and Federal Funds rate increases) prompted lenders to tighten their underwriting standards in 2022 and 2023, and they’ve remained high since then.

• What to know about the Fed rate in 2024

  The Fed rate hasn’t changed since July 2023, but the committee that sets the rate has indicated that it may lower it later this year.

  If you have a personal loan, a lower Fed rate won’t affect your monthly payments because personal loan rates are fixed for the full repayment term.

  If you’re considering a personal loan, a lower Fed rate could mean a chance at a modestly better rate later in the year.

Regardless of economic changes, the biggest factors that determine your personal loan interest rate are your creditworthiness, income and outstanding debts.

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

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

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.

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 12.49% in the first quarter of 2024, according to the Federal Reserve.

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 first quarter of 2024 for a fixed-rate, three-year loan was 10.83%, according to the National Credit Union Administration. Federal credit unions cap personal loan APRs at 18%.

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

• 2. Lower your debt-to-income ratio

  Pay down existing debt to lower your DTI and show lenders that you have ample income for new loan payments. Make sure to include all sources of income on an application.

• 3. Ask for the minimum you need

  Requesting a large loan could cause a lender to charge a higher interest rate. Consider what the money is for and don’t ask for more than you need.

• 4. Shorten your repayment term

  Lenders often give lower APRs for shorter term loans because a shorter term means there’s less time for your financial situation to change during repayment. Choose the shortest loan term you can while still keeping monthly payments affordable.

• Lenders offer discounts for a few different reasons. Many online lenders offer rate discounts for setting up automatic payments. Some banks offer rate discounts to existing customers who hold certain bank accounts.

• Origination fees are the most common personal loan fees, and they can drive up your APR, but not all lenders charge them. Compare lenders’ fees and look for one that charges low or no fees.

• 7. Add a co-signer or co-borrower

  Borrowers with blemished credit can add a co-signer or co-borrower with better credit and higher income for a better chance of qualifying or a potentially lower rate. Both co-signers and co-borrowers are responsible for repaying the debt if the primary borrower misses payments.

• You may qualify for a personal loan or get a lower rate by pledging collateral like a vehicle or savings account. With a secured loan, the lender can take the collateral if you default.

• 9. Pre-qualify and compare offers

  Many lenders offer pre-qualification, which lets you preview the potential loan amount, rate and repayment term without affecting your credit score. Pre-qualify with multiple lenders to compare offers and select the best 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.

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 or lowered your debt since you first borrowed. Lenders have different refinancing policies: Some allow borrowers to refinance a personal loan you have with them, but others may require you to refinance with a different lender.

If you refinance, be mindful of the new loan’s term. Even with a lower rate, a longer repayment term could raise the total interest costs.

Other ways to borrow money include: