Best Personal Loan Rates for December 2024

LightStream offers the best personal loan rates for December 2024, followed by Upstart and Splash. The best personal loan rates start around 7% and are reserved for the most creditworthy borrowers. Personal loan interest rates range from around 7% up to 36% with the average for a two-year loan sitting at 12.33%, according to the Federal Reserve.

A personal loan can be used in a number of situations, from consolidating debt to paying for a major expense like a vacation or hospital bills. No matter how you plan to use the money, make sure you don't overpay for it. Personal loan annual percentage rates (APRs) directly impact how much your monthly payment costs and how much you'll end up paying over the life of the loan. Here's everything you need to know about choosing the best personal loan rate.

Compare personal loan rates for December 2024

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. If you have fair or bad credit, look at how high (instead of how low) each lender's rates can go.

What are the best personal loan rates?

The lenders below had the lowest minimum APRs of the lenders Credible reviewed at the time of publication. But that doesn't necessarily mean you'll qualify for that APR. The rate you get depends on your credit score, debt-to-income ratio (DTI), income, and other factors. 

To find your best rate, prequalify with multiple lenders that suit your criteria first. Prequalification lets you see rates you're likely to qualify for, without hurting your credit score. Once you formally apply, the lender will conduct a hard credit check, which could temporarily ding your credit score by a few points.

Methodology

Credible evaluated 24 lenders for the best personal loan rates primarily based 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.

How should I compare personal loan lenders?

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.

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.

What are the minimum credit score requirements for the best personal loan rates?

Your credit score can range from 300 up to 850. But borrowers with good to excellent credit scores tend to qualify for the best personal loan rates. A good FICO credit score is between 670 and 739, a very good score is from 740 to 799, while a score of 800 or above is considered excellent. Getting approved for a personal loan with a lower credit score may be challenging.

FICO credit scores are based on five primary categories:

• Payment history: 35%
• Amounts owed (credit utilization): 30%
• Length of credit history: 15%
• Credit mix: 10%
• New credit inquiries: 10%

If you hope to qualify for the best personal loan rates, work on improving your credit score first.

How can I improve my credit score?

Improving your credit score can take time, but the effort can result in much better personal loan terms. Here are some strategies:

• Pay your bills on time: Late payments can quickly damage your credit score, while consistent on-time payments improve your score in the long run.
• Reduce credit card balances: Keep your credit card balances under 30% of your total credit limit to reduce your credit utilization and maximize your score.
• Check your credit report for errors: You can get free copies of your credit reports weekly from AnnualCreditReport.com. If you find errors or fraudulent activity, report it to the bureaus immediately.
• Limit new credit applications: In most cases, your credit score drops slightly every time you apply for a new line of credit. When applying for a personal loan, limit applications to keep your score as high as possible. Note that if you’re rate shopping for a mortgage or auto loan, multiple hard credit inquiries may be counted as just one if you group them within 14 days or 45 days, depending on the FICO scoring model used.

Related: How To Build Credit

How do I 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. 

How does a personal loan affect your credit score?

Taking out a new loan can impact your credit score. When you're ready to submit a personal loan application, the lender runs a hard credit check. The inquiry appears on your credit report for two years and, generally, causes a small decrease in your score for one year.

Other than the initial credit inquiry, it’s up to you to determine whether a personal loan will impact your credit in a positive or negative way. 

Note that a personal loan will also increase your DTI, which could make it harder to qualify for new credit, though not impact your score directly.

Learn More: How Does a Personal Loan Affect Your Credit Score?

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