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Last week, personal loan rates increased. But you can still snag a reasonable rate, whether you’re looking to finance a home remodeling project, vehicle, unexpected bills or temporarily need to improve your cash flow.
For borrowers with a credit score of 720 or higher who prequalified on Credible.com’s personal loan marketplace, the average interest rate on a three-year personal loan was 15.89% from July 22 to July 27. According to Credible.com, that’s a 0.04% increase from the previous week. The average rate on a five-year personal loan rose 0.40% last week to 19.72% from 19.32%.
Keep in mind that the rate you’ll receive depends on a number of factors, including your creditworthiness and the loans available through your chosen lender. The most creditworthy borrowers may be able to receive rates significantly lower than average.
These rates are accurate as of July 29, 2024.
Related: Best Personal Loans
Getting the Best Rates
Two quick ways to help you receive more favorable rates include paying down existing debt to help lower your DTI and improving your credit score. Personal loan interest rates are based on a number of factors, including your overall creditworthiness, credit score, income and debt-to-income (DTI) ratio.
While qualification requirements differ across lenders, a minimum credit score of 720 will typically yield you the best terms. If your score falls below this marker, and you’re on a quest for the lowest rate possible, you can take action to improve your score. Try strategies like lowering your credit utilization ratio, removing errors from your credit report and paying your bills early or on time.
Calculate Monthly Personal Loan Payments
Once you have an idea of your personal loan interest rate, you can calculate your monthly payments. You will need to enter your loan’s interest rate, amount and term. This will help you determine how much you’ll owe monthly and how much you’ll pay in interest over the life of your loan.
For example, let’s say you get a $5,000 personal loan with a term of five years at a fixed interest rate of 19.72%. You’d pay about $132 monthly and around $2,902 in interest over the life of the loan, according to the Forbes Advisor personal loan calculator. Overall, you’d pay $7,902 in total, which includes both principal and interest.