Best Low-Interest Personal Loans in December 2024

To qualify for low-interest loans, you’ll typically need good to excellent credit.

Financing emergencies, home renovations, vacations, or other large expenses on credit cards can add up. The average credit card interest rate was 21.86%, according to the Federal Reserve. Rates on two-year personal loans, on the other hand, averaged 12.33%, making a low-interest loan a comparatively affordable alternative. And the lower the rate, the potentially higher the savings. This is why rate-shopping personal loans is crucial.

Our top pick for low-interest personal loans, LightStream, offers rates as low as 6.99% APR, with the possibility of same-day funding and loan amounts up to $100,000 — plus, no origination fees.

Best low-interest personal loans

Methodology

Credible evaluated over 800 data points across 31 lenders to identify the best low-interest personal loans. Our analysis was based primarily on interest rates, but we also considered customer experience, origination fees, loan amounts, loan terms, discounts, the availability of secured loans, whether cosigners are accepted, and more. Credible's team of experts gathered information from each lender's website, customer service department, directly from our partners, and via email support. Each data point was verified by a third party to make sure it was accurate and up to date.

Learn more about how Credible rates lenders by exploring our Personal Loans Lender Rating Methodology.

How to compare low-interest loans

It's essential to consider the following when comparing low-interest personal loans:

• APR (annual percentage rate): The lower the APR, the less you'll pay for the loan overall. APR represents the total annual cost of the interest rate plus any upfront fees.
• Loan amounts: Some lenders can approve you for loans up to $100,000 or more, but remember, the higher the loan, the more you pay back over time. It's imperative that you only borrow what you need.
• Repayment terms: Many lenders offer terms between two and seven years. Choose the one that best fits your needs, as a manageable repayment schedule can help you repay your loan successfully. Check the payment amount and date to ensure you can make your payments.
• Fees: Some, but not all, lenders charge origination fees, which may be deducted upfront from the loan amount, as well as more common fees, like late fees and NSF (nonsufficient funds) fees.
• Cosigner option: If you have fair or bad credit and a lender allows a cosigner, you might be able to secure a lower interest rate than you could on your own. Keep in mind that a cosigner is responsible for payments if you're unable to pay.
• Time to fund: If you need money by a certain time, check how long it will take the lender to send funds once your application is approved. Many lenders can fund your loan as soon as the same or next business day, while others may take as long as a week.

What is considered a low interest rate in 2024?

Based on the lowest APRs available from Credible lenders, a low interest rate is below 13% APR, depending on your credit score and the specific lender. The lowest available APRs range from around 7% to 13%. However, keep in mind that your credit score, credit history, income, and other criteria determine the rate you're offered.

Average personal loan interest rates

Borrowers with credit scores in the following ranges were preapproved at the following rates, based on Credible data from December 2024:

Factors that determine your personal loan rate

Factors that could influence your personal loan rate include:

• Your credit score and reports: When you apply for a personal loan, most lenders perform a hard credit check to see your credit score and history.
• Income: Lenders want to see that you have available income sufficient enough to cover the loan payments.
• Debts: Your debt-to-income ratio (DTI) shows how much of your monthly income is dedicated to paying your current debt. Most lenders prefer a DTI under 36%.
• Amount and length of the loan: Longer loan terms may have lower interest rates than shorter loan terms.
• Interest rates permitted by state law: State laws may limit rates to specific maximums.

How does a low-interest loan work?

Personal loans with low interest rates are like other installment loans. Once approved, you receive a lump-sum payment transferred to your checking account or, perhaps, transferred directly to your creditors in the case of debt consolidation loans. After receiving your funds, you'll repay your loan monthly in fixed payments based on a predetermined payment schedule and interest.

Most lenders let you pay off a loan early without penalty, but check with yours to make sure before doing so.

Related: How Do Personal Loans Work?

Low-interest loans vs. no-interest loans

No-interest loans such as short-term “buy now, pay later” apps, in-store financing, and 0% APR credit cards may seem comparable to low-interest personal loans. And if you can pay off the balance of the loan within the no-interest timeframe, they may be a better choice.

However, once this timeline ends, or if you miss a payment, you could accrue late fees and/or the standard APR may be applied to the remaining balance. The details depend on what type of financing you use. But in most cases, the loan will no longer be no-interest or even low-interest — especially if you consider that some credit card APRs can be 30% or higher.

In contrast, low-interest loans require paying interest from the start, but there's no promotional period after which the interest rate rises. You will have a consistent monthly payment with no surprises and a set end date for paying off your loan.

Pros and cons of low-interest loans

Here are some benefits and drawbacks to consider.

Learn More: What Are the Requirements for a Personal Loan?

How to apply for a low-interest loan

Once you've decided to apply for a low-interest loan, here's what you need to do:

1. Research and compare lenders: Look for personal loan lenders that specialize in low-interest loans. Consider other factors for your needs such as APR, time to fund, and loan amounts.
2. Prequalify: You can prequalify with most lenders to get an idea of what you might qualify for before submitting your loan application. With prequalification, a lender performs a soft credit check, which won't harm your credit score. However, prequalification is not an offer of credit, and the final rate you receive could differ once you apply.
3. Fill out and submit the application: Fill out your application online or in person. You'll likely need to provide proof of income such as a W-2, a legal form of personal identification like a driver's license, and proof of address, such as a credit card statement. Once you submit your application, most lenders perform a hard credit pull, which typically lowers your credit score by a few points.
4. Wait for approval and get your funds: Some lenders can provide your funds the same or next business day once you're approved. But you may wait a week, depending on the lender.

Alternatives to low-interest loans

If you're unable to qualify for a low-interest loan, consider these other options.

• 0% APR credit card: A 0% APR credit card can be easier to secure than a low-interest loan. But once the promotional period ends, the standard APR will apply, which is generally much higher than the average personal loan rate.
• Buy now, pay later: Some of these services allow you to split a purchase into 3-, 6-, or 12-month installments, usually with interest. Many also offer shorter plans with no interest if you make a payment every two weeks (usually for a six-week period).
• In-house financing: Some retailers offer in-house financing with temporary deferred interest. You can set up a payment plan with the company directly. Once the interest-free promotional period ends, the standard interest rate will begin. However, if you don't pay off the entire loan before the end of the interest-free period, you could be responsible for paying all the accrued interest.

Read More:

• Personal Loan vs. 0% APR Credit Card
• Best Personal Loans With a Cosigner
• Best Personal Loans for Bad Credit
• Best Personal Loans for Fair Credit
• Best Personal Loans for Good Credit
• Best Banks for Personal Loans