A personal loan can help you pay for debt consolidation, home improvement or other expenses, but you’ll need to pay it back – with interest. Shopping around for a competitive rate, even on a low-interest personal loan, can reduce the interest you pay. Find out where to shop for low-interest rate personal loans and what to ask before you agree to a new loan.
Here’s what you’ll learn:
- Why is a low-interest personal loan important?
- What is a good interest rate on a personal loan?
- Can you get a low-interest loan?
Max. Loan Amount
Min. Credit Score
|4.99% to 17.99%||$50,000||650|
|2.49% to 19.99%||$100,000||670|
|4.74% to 20.28%||$100,000||Not disclosed|
|5.74% to 19.99%||$100,000||Not disclosed|
|5.99% to 19.49%||$50,000||660|
|6.24% to 10.24%||$50,000||Not disclosed|
|5.99 to 24.99%||$35,000||660|
|5.99% to 24.99%||$40,000||550|
|5.99% to 28.74%||$35,000||Not disclosed|
|7.15% to 17.99%||$50,000||700|
U.S. News selects the Best Loan Companies by evaluating affordability, borrower eligibility criteria and customer service. Those with the highest overall scores are considered the best lenders.
To calculate each score, we use data about the lender and its loan offerings, giving greater weight to factors that matter most to borrowers. Personal loan companies are evaluated based on customer service ratings, interest rates, maximum loan term, minimum and maximum loan amounts, minimum FICO score, online features, and origination fees.
The weight each scoring factor receives is based on a nationwide survey on what borrowers look for in a lender.
To receive a rating, lenders must offer qualifying loans nationwide and have a good reputation within the industry. Read more about our methodology.
Although PenFed Credit Union – officially Pentagon Federal Credit Union – serves members of the armed forces, military associations, veterans and retirees, and their families, a military connection is not required to become a member. The credit union offers personal loans for eligible members and eligible co-borrowers in all 50 states, as well as in Guam, Puerto Rico and Okinawa, Japan.
LightStream is the online consumer lending division of Truist, which formed in 2019 from the merger of BB&T and SunTrust. SunTrust acquired the assets of online lender FirstAgain in 2012 and relaunched the business as LightStream.
LightStream’s online personal loans range from $5,000 to $100,000 and can be used for nearly any reason. Personal loans are available to borrowers nationwide with good to excellent credit.
SoFi, short for Social Finance, offers personal loans of up to $100,000 to borrowers with very good to excellent credit. The nationwide lender was founded in 2011 and is known for offering loans with no fees. In addition to personal loans, SoFi offers student loans, auto and student loan refinancing, home loans, and small-business financing.
U.S. Bank has physical locations in more than 25 states and offers both short- and long-term personal loans with fixed annual percentage rates starting at 5.99%. Current customers may qualify to borrow up to $50,000 with a credit score of 660 or above, and options are available for noncustomers willing to open a checking or savings account.
If you need money fast, Alliant Credit Union typically makes same-day online personal loans between $1,000 and $50,000. The $14 billion Chicago-based credit union, founded in 1935, is one of the biggest in the nation, with 600,000 members.
In addition to personal loans, Alliant offers home and auto loans, credit cards, checking and savings accounts, individual retirement accounts, trust accounts, and insurance policies.
Payoff offers personal loans designed to consolidate credit card debt. It operates in all but two states and provides loans of up to $40,000.
Payoff is not a bank and instead works with lending partners that originate the loans. The California-based financial wellness company falls under a parent company called Happy Money, which takes a psychological approach to money matters.
PNC Bank can trace its history back to 1852 and the Pittsburgh Trust and Savings Co. Today, PNC Bank is the seventh-largest bank in the U.S., and it features a wide range of consumer and business banking services. Among its suite of products, PNC offers personal, unsecured installment loans up to $35,000. Applicants are considered based on satisfactory credit history, ability to repay and income.
*Rate as of Mar. 16, 2022
Select your desired loan amount and loan purpose, your credit score range, and your state to see estimated annual percentage rates and loan terms.
The lower your personal loan interest rate, the less you’ll pay to borrow money. This scenario shows how interest rates affect the cost of a personal loan:
Let’s say you received an offer for a $5,000 personal loan with a 9.3% annual percentage rate and a four-year repayment term. With this loan, you would pay $1,006.66 in interest alone.
Now assume that you were approved for a $5,000 personal loan with a 6.75% APR and the same four-year term. Your total interest charges on this loan would be $719.30, resulting in interest savings of $287.36.
You’ll want to consider a number of factors when choosing the best low-interest personal loan:
- What terms can I expect? Not only will you want to lock down a low interest rate, but you’ll also want to get the loan repayment length you need. Use these factors to calculate your monthly payment to be confident the loan is something you can afford.
- What fees does the lender charge? Some lenders charge an origination fee that can vary from 1% to 10% of the loan amount, which greatly affects the payout you’ll actually receive. Also check for prepayment penalties, late payment fees and any other fees the lender lists.
- What loan amounts does the lender offer? Most lenders offer a minimum and a maximum loan amount, so it’s worth noting before you apply. After all, if a lender’s maximum amount is less than you need, don’t waste your time.
- What are the repayment options? Lenders usually offer multiple payment options, including online, check and automatic payments. Automatic payments might come with a discount. Some lenders also provide flexibility with your payment date, so you can change it to a date that works best for you.
- Are there any loan use restrictions? Some lenders have restrictions on how you can use your loan, and be sure to be honest about how you’ll use the money – lying on your loan application can be deemed loan fraud and result in extra charges.
- How is the lender’s customer service? Check online reviews, such as the Better Business Bureau, Trustpilot or the Consumer Financial Protection Bureau. If the lender is a financial institution, you might reach out to family and friends about their personal experience.
A good interest rate on a personal loan is lower than the national average, according to the credit bureau Experian. The average rate for a 24-month personal loan in November 2021 was 9.09%, according to the Federal Reserve.
That could be good news if you need to pay off high-interest credit card debt. You’ll pay down debt faster on a personal loan than on credit cards with higher interest rates, says David Bakke, personal finance expert at Dollar Sanity, a financial education website.
But getting approved for a low-interest personal loan depends on your credit profile, including credit history and score, income, and debt. All lenders have their own criteria for setting borrowers’ personal loan interest rates and terms.
- Save money. Low-interest personal loans may help borrowers consolidate high-interest credit card debt and pay it off more quickly at a lower interest rate.
- See a quick turnaround. You may potentially receive funds for personal loans in as little as one business day.
- Provide no collateral. Low-interest personal loans are typically unsecured, so you won’t need to use your home or car for collateral.
- There may be fees. Your lender may charge an origination fee, prepayment fee or late payment fee.
- Restrictions may apply. Some lenders may restrict how you can use the money. For example, you may not be able to use it to pay for college tuition.
- You may not qualify. If you don’t have stellar credit, you likely won’t qualify for a low-interest personal loan.
Here are a few key areas that lenders look at to determine personal loan approvals and interest rates:
Your credit score is one of the major factors lenders consider for personal loan eligibility, says Lauren Anastasio, director of financial advice at Stash, a financial technology firm.
“Lenders don’t always disclose whether they have a minimum credit score for applicants, but often they prefer to see a good or excellent credit history,” she says.
Meeting the minimum credit score doesn’t mean you’ll qualify for the lowest loan rates advertised. A FICO credit score in the mid-700s or higher is considered very good to exceptional and generally earns you a competitive interest rate.
Borrowers with fair or bad credit shouldn’t expect low interest rates on personal loans.
A co-signer, ideally one with strong credit, agrees to make payments if you can’t or don’t. Lenders may be more willing to approve a loan at a lower interest rate when you have a co-signer.
“If you don’t have a stellar credit score or don’t make very much, adding a co-borrower to your loan might increase your chances of approval,” Anastasio says. “They might also help you get a better interest rate and repayment terms.”
Your debt-to-income ratio is the percentage of your gross monthly income – your earnings before taxes or other deductions – you put toward debt. It helps lenders gauge whether you can manage a personal loan payment without financial hardship.
“In a nutshell, the maximum debt-to-income ratio you want if you’re looking for a personal loan is right around 35%,” Bakke says. “Anything higher than that and the lender will be thinking twice about whether or not to extend the loan.”
Additionally, some lenders may have a minimum annual income requirement.
“Secured loans, backed by assets owned by the borrower, like a car or house, are less risky to the lender and therefore often come with much lower interest rates, reducing the cost of borrowing over the life of the loan,” Anastasio says.
But before jumping on a secured personal loan, factor in the risk of losing whatever you used as collateral if you can’t make the monthly payments.
Some lenders offer a small APR percentage point reduction for existing customers or signing up for automatic payments. Some lenders list interest rates that include autopay discounts.
Find the Personal Loan That’s Right for You
Take these steps to find the lowest rates on personal loans.
Lenders may advertise an APR range, but you won’t find out your rate until a lender checks your credit. Prequalification uses a soft credit inquiry, which doesn’t hurt your credit score, to tell you whether you could be approved for a low interest rate personal loan.
“Many lenders allow potential borrowers to see if they prequalify for a loan before applying,” Anastasio says. “This process shows how much the loan would potentially be approved for (and) what your repayment terms and your interest rate could possibly be.”
Not all lenders offer prequalification, but online lenders generally do.
Prequalifying for a personal loan doesn’t guarantee approval when you apply. But this option gives you great insight into whether you might meet borrower criteria and estimates loan terms without a hard credit check that could lower your credit score.
2. Check With Your Bank or Credit Union
When you’re rate shopping, getting a quote from a financial institution you have a relationship with could pay off.
“Your bank or credit union would be a great place to start,” Bakke says. “However, rates and fees do vary, so it’s recommended that you get quotes from at least three lenders.”
Your bank or credit union might be able to offer a more competitive rate or origination fee than rivals because it has a window into your finances that the others don’t. If you have deposit accounts, for example, the bank may consider your wages, spending patterns and savings.
3. Work on Your Credit and Try Again
If you can’t get approved for a competitive interest rate on a personal loan, you might want to pause and focus on raising your credit score. Check your credit reports for errors to dispute, pay down debt, make on-time monthly payments, and take other steps to improve your credit before you reapply for a personal loan.
If you have bad credit, you likely won’t be able to qualify for a low-interest loan. Borrowers with bad credit often end up with high interest rates and other less-than-ideal terms for personal loans. Take some time to compare lenders and choose a loan with the lowest overall cost, factoring in APRs, account fees, repayment terms, collateral requirements and lender reviews.
Carefully review personal loan options before you commit to a loan. Read full reviews of the best lenders for the lowest interest rate personal loans.
Loan terms vary. In addition to interest rate, you can learn about each lender’s:
- Loan amount range.
- Minimum credit score requirement.
- Minimum income requirement.
- Loan terms, or time to pay off the loan.
- Customer service ratings, such as from the Better Business Bureau.
Depending on why you need the funds, there may be alternatives to consider before committing to a personal loan.
- Look at other types of loans. A home equity loan or a home equity line of credit may be an option for home repairs, and an auto loan for a new or used car purchase. Compare other types of loans and their terms to see if they offer a better rate.
- Make a payment arrangement. Costs such as unpaid medical expenses can significantly impact your credit score, but always attempt a payment arrangement with the medical provider before taking out a personal loan.
- Tap into your 401(k). Although traditional advice would strongly dissuade you from taking money out of your retirement account, a 401(k) loan is a valid option under certain circumstances. As long as you pay back the loan within about a year, the impact on your long-term gains should be minimal.
- Borrow from a family member. Asking for money may be difficult, but if someone is in a position to help, then it may be even better than a low-interest personal loan. It’s up to you to weigh the pros and cons of borrowing from friends or family.
Best Egg is a national online lender founded in 2014 with backing from Marlette Funding, a financial services company with banking and technology experience. Best Egg offers personal loans starting at $2,000 that can be used to cover medical bills, home remodeling and a variety of other expenses. Cross River Bank in New Jersey issues Best Egg loans, which can be funded in as little as one business day.
Founded in 2005 and based in San Carlos, California, Oportun originates unsecured personal loans of up to $10,000 in 12 states. Loans are available in 26 additional states through Oportun’s partnership with MetaBank.
The lender has no credit history requirement, making the loans an option for consumers with no credit or limited credit. In addition to unsecured personal loans, the lender offers secured personal loans to borrowers in California, Florida and Texas.
LendingClub is an online marketplace that connects borrowers and investors through its network of lending partners. LendingClub initially launched on Facebook and has evolved into an extensive peer-to-peer lender. Borrowers in all U.S. states except Iowa and U.S. territories who have fair to excellent credit can get $1,000 to $40,000 loans with LendingClub.
FreedomPlus is an online lender offering personal loans from $7,500 to $40,000 to meet a range of needs and promising quick approval and disbursal. A prospective borrower begins by applying online and then talks with a loan consultant.
Fair credit scores of at least 620 can qualify for FreedomPlus personal loans, but excellent credit is needed for the best terms. A FICO score in this range, a loan of less than $12,000 and a repayment term of 24 months could get a borrower the lowest available APR of 7.99%. The lender also offers several interest rate discounts to qualified applicants.
Annual percentage rates are 7.99% to 29.99%, and repayment terms are two to five years. FreedomPlus charges an origination fee of 1.99% to 4.99% of the loan amount but no prepayment penalties.
The lender will verify the borrower’s income and bank account and ask for a signature and a valid ID to approve and fund the loan. FreedomPlus aims to get borrowers their money within 48 hours, as long as they have provided complete applications and supporting documents.
Borrowers can reach loan consultants from 6 a.m. to 7 p.m. Pacific time Monday through Friday and from 7 a.m. to 3 p.m. Pacific time Saturday and Sunday. All loans available through FreedomPlus are made by New Jersey-based Cross River Bank.
Prosper is a peer-to-peer lending marketplace that allows borrowers to apply online for fixed-rate, fixed-term loans. Investors such as Sequoia Capital, Francisco Partners and Institutional Venture Partners provide backing for Prosper. Since its founding in 2005, Prosper has made possible more than $19 billion in loans. Prosper lends to borrowers with at least a 640 FICO score.
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