Best Personal Loan Rates for January 2025

Your personal loan rate directly affects how much you'll pay for your loan, potentially raising or lowering the total cost of borrowing money. 

LightStream has among the best personal loan rates in the industry, ranging from 6.94% to 25.29%. Best Egg and Upstart are two other ultra-low rate options. Just note that if you have anything other than excellent credit, it's unlikely you'll qualify for rock-bottom rates.

Lenders with the best personal loan rates

Don't assume you'll receive the same loan quote from all lenders. Even though your credit score and financial situation may not change, lender criteria do. This is why it's essential to compare quotes from multiple lenders before you apply for a loan.

Methodology

Credible evaluated 31 lenders for the best personal loan rates based primarily on the minimum fixed annual percentage rate available at the time of publication. Our team of experts gathered information from each lender's website, customer service department, in-house resources, and via email support. We chose the best lenders based on the following weighted categories:

• Rates and fees: 18%
• Loan terms: 18%
• Customer experience: 17%
• Eligibility: 14%
• Customer satisfaction: 10%
• Efficiency: 10%
• Options for poor credit and no credit: 9%
• Discounts: 9%

Each data point was verified to make sure it was accurate at the time of publication. Learn more about how Credible rates lenders by exploring our personal loans lender rating methodology.

Current average personal loan interest rates

The average personal loan rate for a three-year loan was 15.41% APR, according to Credible data from December 2024. With a five-year loan, the average rate was 22.33%. But the rate you'll qualify for depends largely on your credit score.

Average personal loan interest rates by credit score

The best personal loan rates are reserved for borrowers with excellent credit. Generally, the higher your credit score, the lower the interest rate you can get. The table below shows how average rates can vary by credit score.

APR vs. interest rate

You might notice that lender websites usually list APR, or annual percentage rate, rather than interest rates when referring to personal loans. APR is a more accurate way to compare the overall cost of a loan.

"If you were to draw a bubble for interest rate and for APR, the interest rate bubble would be inside of the APR bubble," said Kate Hao, founder and CEO of the financial services company Happy Mango. "APR not only includes interest rate, which represents the cost of borrowing, but also the various upfront fees a lender may charge for making a loan," like an origination fee or application fee.

Compare: APR vs. Interest Rate on a Personal Loan

What is a good interest rate on a personal loan?

The lowest APR available from personal loan lenders is around 7%. However, the average rate for a two-year personal loan is 12.33%, according to the Federal Reserve. As noted, average three-year loan rates are 15.41%, per Credible data. Your credit score and other factors, like the amount of debt you owe, the repayment term for your loan, and even the loan's purpose can affect your rate.

Prequalify with multiple lenders to learn what rates you might be eligible for if you apply for a personal loan. Prequalification rates are just estimates, but they let you compare potential terms and rates of several loans before you apply without affecting your credit score.

Related: Does Applying for a Loan Hurt Your Credit Score?

How are personal loan interest rates determined?

Lenders base interest rates for personal loans on factors including the federal prime rate. "The prime rate is the current market interest rate that U.S. commercial banks charge their most creditworthy and low-risk customers," explained Hao, adding that it fluctuates with the effective federal funds rate and the market's supply and demand.

The interest rate a lender offers you could be close to the prime rate or much higher, depending on your credit profile. The lender determines your creditworthiness using several factors, like your credit score, credit history, and income.

How to get a low interest rate

Your credit score is a prime consideration for most lenders when determining your interest rate, but it's not the only factor. "Ultimately, it's about showing lenders you're a low-risk borrower," says David Tuyo, CEO of University Credit Union. "The stronger your overall financial profile, the better the terms you're likely to get."

Having steady employment and income and making debt payments on time can show that you're able to manage your finances well — a good indicator of a low-risk borrower. 

Your debt-to-income ratio (DTI) is also important, as it shows how much of your monthly income goes toward paying debt. It's generally a good idea to keep your DTI at 36% or lower, although some lenders may be open to a higher DTI.

Other ways you might get a lower interest rate include:

• Use a cosigner or co-borrower: If you have a cosigner, ideally with a higher credit score than yours, the lender could offer you a lower interest rate. A loan with a co-borrower is similar, except both you and your co-applicant have access to the loan funds. Keep in mind, however, that a cosigner or co-borrower runs the risk of being on the hook for repayment if you default on the loan.
• Get a secured loan: Personal loans are typically unsecured, but some loans allow you to pledge an asset, such as a car or home, as collateral. A secured loan could have a lower interest rate, but defaulting might put your collateral at risk of repossession or foreclosure by the lender.
• Correct errors on your credit report: You can check your credit report for free using AnnualCreditReport.com and dispute any errors you find. It's a multi-step process that involves documentation and contacting not only credit bureaus but also the company that supplied the erroneous information.

Learn More: How To Get a Low-Interest Loan

What are the requirements for a personal loan?

Before you apply, understand the lender's qualifications. While the specifics, such as minimum credit score and income, often differ between lenders, here's what lenders generally look for:

• A good-enough credit score and profile: Your credit profile directly impacts your personal loan eligibility and interest rate. Applicants with the highest credit scores are most likely to qualify for the best rates.
• Sufficient income: Lenders want to confirm that you have consistent and sufficient income to cover your payments each month.
• A low debt-to-income ratio: Your debt-to-income ratio (DTI) compares your monthly debt payments to your monthly gross income. Lenders generally prefer that your DTI is below 36%, though some lenders will consider higher.
• Other general requirements: You'll also need to live in a state served by the lender, be 18 years of age or older, have a bank account, and have a Social Security number.

Minimum credit score requirements for the best personal loan rates

A very good-to-excellent credit score is usually what lenders look for when approving applicants for the best rates. This means a FICO score of 740 or above. While you might qualify for a personal loan with a lower credit score, you shouldn't expect to be offered the best rates.

For example, borrowers with credit scores of 780 or above who applied with a lender through Credible saw average rates of 12.56% for three-year loans and 17.59% for five-year loans.

Check Out: What Credit Score Do You Need for a Personal Loan?

How to improve your credit

Improving your credit is the best way to qualify for the best personal loan rates. Although it doesn't happen instantly, you can take small steps now to boost your credit over time.

• Pay down debt: The amount of available credit you use (credit utilization) contributes up to 30% of your FICO score. Try to keep your credit utilization at 10% or lower by regularly paying down your debt.
• Request credit limit increases: If you can't pay down debt, Tuyo suggests requesting credit limit increases from your credit card companies, which can "lower your credit utilization without needing to pay down balances." Credit card companies consider your credit score, income, and how you use your current credit limit to decide whether to approve your request.
• Set payment reminders: Your payment history has the biggest impact on your credit score (35%). Help yourself make payments on time by setting due date reminders on a digital calendar or opting into email or text notifications when payments are due. You can also set up automatic payments with creditors to help ensure you don't miss your next due date.
• Be careful about applying for new credit: Opening several new accounts in a short period can make you look risky to lenders and affect your credit score. New inquiries can remain on your credit report for two years. Plus, every new account you open decreases the length of your credit history, which accounts for 15% of your FICO score. Think about whether new credit is necessary and could improve your financial future before applying.
• Become an authorized user: Ask someone you're close with who has a strong credit history to add you as an authorized user to their credit card account. The account will appear on your credit, allowing you to reap its benefits, like on-time payments or low credit utilization.

How to choose the best personal loan

Most lenders let you prequalify online without impacting your credit. Prequalification gives you an idea of the rate, terms, and loan amount you might be approved for with different lenders.

Note that prequalification is not an offer of credit, and once you apply for a loan, the lender will conduct a hard credit inquiry that could lower your credit score temporarily.

Here are some factors to consider when weighing your options:

• APR: The APR you'll ultimately receive depends on your credit profile, including your credit score, how much debt you already have, and your income. The APR accounts for both the interest rate and any upfront fees, like an origination fee, which makes it a better measure of cost than the interest rate alone.
• Loan amounts: Different lenders offer a range of loan amounts. While it may be exciting to get approved for a larger amount, make sure you only borrow as much as you need and that you're comfortable with the payments.
• Repayment terms: A shorter loan gets you out of debt faster and you'll pay less interest overall. But your payments will be higher than a longer term loan for the same amount at the same interest rate. Consider monthly payments as well as the total cost of the loan.
• Fees: Some lenders charge an origination fee that can range up to 12% of the loan amount, depending on the lender and your credit profile. If a loan you're considering charges an origination fee, that fee is generally deducted from your loan amount, which means the amount deposited in your account will be less than what you applied for.
• Cosigner option: If your credit score is below average, applying with a cosigner could improve your approval odds as well as your loan terms. Just know that they will be equally responsible for your loan.
• Time to fund: If you need money quickly, compare lenders based on how quickly the funds will reach your bank account. Some lenders offer same-day funding.

Learn More: How To Compare Personal Loans

5 steps to apply for a personal loan

Here's what to expect as you apply for a personal loan:

1. Research lenders: Research eligibility requirements, such as minimum credit score and income requirements, as well as funding times, to narrow down your list of lenders.
2. Prequalify: Many lenders offer a prequalification step that lets you compare different loan quotes without hurting your credit. Just note that prequalification terms are not an offer of credit, and once you formally apply for a loan, the lender will conduct a hard credit check that could temporarily lower your score by a few points.
3. Compare loan quotes: Once you've prequalified, consider which loans have the best interest rates plus other criteria, including loan amount, time to fund, repayment terms, fees, discounts, the lender's reputation, and the lender's online platform and app.
4. Choose the best personal loan and apply: Next, it's time to submit a full application for the loan that looks best to you. The lender performs a hard credit check at this stage. You'll also need to submit documents to verify your income and finances, like pay stubs, W2s, or bank statements.
5. If approved, review the agreement and get your funds: If you're approved, review the loan agreement. Note when your first payment is due and make sure the terms of the loan (APR, repayment term, loan amount, fees) are what you expect, then sign if it's acceptable. Once you sign the agreement, the lender distributes the cash to your account, or to your creditors if you're consolidating debt.

Steps to take if you're denied a personal loan

Getting denied a personal loan can be discouraging, but it doesn't mean you're out of options.

Hao suggests reviewing the denial letter a lender send, which lists its reasons for denying your loan. These could include insufficient income, employment instability, a low credit score, or a high debt-to-income ratio. Understanding what's in this letter can help you "work on whatever led to your denial before applying for another loan," explains Hao.

If your denial was related to your credit, consider requesting a copy of your credit report. You can get copies from all three credit bureaus from AnnualCreditReport.com. "Look for errors or outdated information that could be holding you back, and dispute anything inaccurate," says Tuyo. "If high debt is the issue, focus on paying down balances or restructuring existing debt to improve your debt-to-income ratio."

Tuyo also recommends direct contact for follow-up. The lender "may offer guidance on what would make you a stronger candidate in the future or suggest alternative options, like a smaller loan or secured loan."

Learn More: What to Do If You're Denied a Personal Loan

Read More:

• Best Banks for Personal Loans
• Best Credit Unions for Personal Loans
• Best Online Personal Loans
• Best Personal Loans for Fair Credit
• Best Personal Loans for Good Credit
• Best Personal Loans for Bad Credit
• Best Personal Loans for Excellent Credit