Personal loan rates are rising, but the 5-year rates are still lower than they were at this time last year
Our goal here at Credible Operations, Inc., NMLS Number 1681276, hereinafter referred to as “credible”, is to give you the tools and confidence you need to improve your finances. Although we promote products from our partner lenders who reward us for our services, all opinions are our own.
Borrowers with good credit personal loans Prequalified during the last seven days for interest rates that were higher for 3-year Fixed Rate Loans and 5-Year Fixed Rate Loans compared to the previous seven days.
For borrowers with a credit score of 720 or greater who selected a lender through the Credible Marketplace between December 20-26:
- The interest rates on 3-year fixed-rate loans averaged 11.77%, down from 11.30% in the seven days before and 11.29% a year ago.
- The interest rates on 5-year fixed-rate loans averaged 14.78%, down from 14.38% in the last seven days and less than 15.14% a year ago.
Personal loans have become a popular way to Consolidate and pay off credit card debt and other loans. They can also be used to cover unexpected expenses, such as: Medical billsto take care of a major purchase, or Finance home improvement projects.
Personal loan interest rates can fluctuate from day to day, and movements of 1% are not uncommon. However, the increases over the past seven days have been gradual and borrowers can still get a good deal on a personal loan. Today’s personal loan interest rates can be especially attractive to borrowers looking to consolidate credit card debt. The average credit card interest rate is around 17% (according to Federal Reserve data), and those with average or below average credit scores can have much higher interest rates.
Whether a personal loan is right for you often depends on several factors, including what interest rate you may qualify for. Comparing multiple lenders and their interest rates can help ensure you get the best possible personal loan for your needs.
It’s always a good idea Compare shop on sites like Credible to understand how much you qualify for and choose the best option for you.
Here are the latest trends in personal loan interest rates from the Credible marketplace, updated weekly.
Weekly personal loan interest rate trends
The graph above shows the average prequalified interest rates for borrowers with a credit score of 720 or higher who used the Credible marketplace to select a lender.
For the month of November 2021:
- The 3-year personal loan interest rates averaged 11.32%, down from 11.33% in October.
- The interest rates on 5-year personal loans averaged 14.25%, down from 13.85% in October.
The interest rates on personal loans vary significantly depending on creditworthiness and loan duration. If you want to know what installments you can qualify for for personal loans, You can use an online tool like Credible to compare options from different private lenders. Checking your rates doesn’t affect your creditworthiness.
In November, the average prequalified rate selected by borrowers was:
- 8.92% for borrowers with a credit score of 780 or higher who opt for a 3 year loan
- 29.04% for borrowers with a credit score below 600 who opt for a 5 year loan
All of the lenders on the Credible marketplace offer fixed rate loans at competitive rates. Because lenders use different methods to evaluate borrowers, it is a good idea to obtain personal loan rates from multiple lenders so that you can compare your options.
Current personal loan rates by creditworthiness
Depending on factors such as your creditworthiness, the type of personal loan you are looking for, and the loan term, the interest rate can vary.
As the table above shows, good credit can mean a lower interest rate, and interest rates tend to be higher on fixed-rate loans with longer repayment periods.
This is how you get a lower interest rate
Many factors affect the interest rate a lender can offer you on a personal loan. However, there are some steps you can take to increase your chances of getting a lower interest rate. Here are some tactics you can try.
Generally, people with higher credit ratings will qualify for lower interest rates. Steps That Can Help You Improve Your Credit Score over time include:
- Pay bills on time. Payment history is the most important factor in your creditworthiness. Pay all your bills on time when they are due.
- Check your credit report. Take a look at your credit report to make sure there are no errors. If you find mistakes, dispute them with the Schufa.
- Lower your credit utilization. Paying off credit card debt can improve this important credit rating.
- Avoid opening new credit accounts. Only apply for and open credit accounts that you actually need. Too many tough inquiries about your credit report in a short amount of time can lower your credit score.
Choose a shorter repayment term
Repayment terms for personal loans can vary from one to several years. In general, shorter terms come with lower interest rates because the lender’s money is at risk for a shorter period of time.
If your financial situation permits, you can get a lower interest rate with a shorter term. Remember that the shorter term is not just for the benefit of the lender – if you choose a shorter term, you will pay less interest over the life of the loan.
Get a co-signer
Perhaps you know the concept of a co-signer when you have a student loan. If your credit isn’t good enough to qualify for the best personal loan interest rates, find a co-signer with good credit could help you secure a lower interest rate.
Remember, if you default on the loan, your co-signer will be on the hook to repay it. And signing a loan could also have an impact on their credit score.
Compare the rates from different lenders
Before applying for a personal loan, it is a good idea to shop around and compare quotes from various lenders in order to get the lowest interest rates. Online lenders usually offer the most competitive interest rates – and can pay off your loan faster than a brick and mortar company.
But don’t worry: comparing tariffs and conditions doesn’t have to be a time-consuming process.
Credibility makes it easy. Just enter how much you want to borrow and you can compare multiple lenders to choose the one that makes the most sense to you.
Credible is a multi-lender marketplace that enables consumers to discover financial products that are best suited to their particular circumstances. Credible’s integration with leading lenders and credit bureaus enables consumers to quickly compare accurate, personalized credit options – without compromising their personal information or compromising their creditworthiness. The Credible marketplace offers an unrivaled customer experience, as reflected in over 4,500 positive Trustpilot reviews and a TrustScore of 4.7 / 5.