Personal loan rates fall – 3-year rates fall to their lowest level since July
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Borrowers with good credit who looked for personal loans in the week of September 13, 2021 received a prequalification for both the 3- and 5-year terms compared to the fixed-rate loans of the previous week.
For borrowers with a credit score of 720 or greater who used the Credible marketplace to select a lender in the week of September 13th:
- The interest rates on 3-year fixed-rate loans averaged 11.14%, down from 11.97% the previous week and 12.10% a year ago. This is the lowest since the week of July 12th, when the average rate was just 10.97%. Last year, The 3-year personal loan interest rates were lowest in the week of August 3, 2020, averaging 10.45%.
- The interest rates on 5-year fixed-rate loans averaged 14.88%, down from 15.30% the previous week and 14.10% a year ago. 5-year personal loan rates hit a low of 12.62% in the week of May 3, 2021 over the past 12 months.
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 like medical bills, do a major purchase, or fund home improvement projects.
After rising toward 12% in the week of September 6th on private fixed loan rates for 3 years, they returned to one of their lowest levels of the year last week. The 5-year fixed interest rates also fell to 14.88% – which is significantly less than in the two preceding weeks. Borrowers looking to refinance other high-interest debt should opt for a 3-year personal loan to take advantage of this low interest rate before it goes up.
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 rates can help ensure that you get the best possible personal loan for your needs.
It’s always a good idea to compare 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.
Weekly personal loan rate trends
The graph above shows 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 August 2021:
- The 3-year personal loan interest rates averaged 11.47%, down from 11.35% in July.
- The interest rates on 5-year personal loans averaged 14.34%, up from 13.67% in July.
Personal loan interest rates vary significantly depending on creditworthiness and loan duration. If you want to know what type of personal loan rates you can qualify for, you can use an online tool like Credible to compare the options of different personal lenders. Checking your rates doesn’t affect your creditworthiness.
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 shown in the graph above, good credit can mean a lower interest rate, and interest rates tend to be higher on loans with fixed rates and longer repayment periods.
This is how you get a lower interest rate
Many factors affect the interest rate that a lender offers you on a personal loan. However, there are a few 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 scores 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 determining 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
The repayment periods for personal loans can range 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 allows, you can get a lower interest rate by applying for a shorter term. Remember, 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
You may be familiar with 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, finding a co-signer with good credit can help you get 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 creditworthiness.
Compare the rates from different lenders
Before applying for a personal loan, it is a good idea to shop around and compare quotes from different lenders in order to get the lowest interest rates. Online lenders usually offer the most competitive rates – and can pay off your loan faster than a brick and mortar company.
But don’t worry, comparing prices 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 for you.
Credible is a multi-lender marketplace that enables consumers to find financial products that best suit 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 incomparable customer experience, which is reflected in over 4,500 positive Trustpilot reviews and a TrustScore of 4.7 / 5.