What Is the Average Personal Loan Interest Rate?

Advertiser Disclosure

Student Loan Hero Advertiser Disclosure

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.

Editorial Note: This content is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by the financial institution.

student loan interest rates
Logo

We’ve got your back! Student Loan Hero is a completely free website 100% focused on helping student loan borrowers get the answers they need. Read more

How do we make money? It’s actually pretty simple. If you choose to check out and become a customer of any of the loan providers featured on our site, we get compensated for sending you their way. This helps pay for our amazing staff of writers (many of which are paying back student loans of their own!).

Bottom line: We’re here for you. So please learn all you can, email us with any questions, and feel free to visit or not visit any of the loan providers on our site. Read less

When you need a personal loan, it can be stressful trying to guess what APR you’ll get — and by extension, how much you’ll pay for your loan over time.

Your APR, or annual percentage rate, helps determine how much money you’ll pay over the life of your loan and what your monthly payment will be. It’s important to try to get the lowest rate possible.

However, interest rates vary between lenders. Some lenders offer rates starting as low as 3.99%. Others charge rates as high as 35.99% — an amount that can potentially add hundreds or even thousands of dollars to the cost of your loan.

Making things even murkier, most personal loan providers advertise a wide range of potential APRs. So you could find yourself drawn to one lender because of their extra low minimum rates only to find the rate you’re actually offered is much higher.

The average personal loan rate

You can get a sense of the rates you could qualify for by looking at the average APR for borrowers with a similar credit score.

According to a study published by LendingTree, the parent company of Student Loan Hero, the average personal loan rate for a three-year, $10,328 personal loan hovered between 18.51% and 27.30% in May 2018. However, borrowers with excellent credit can often secure much lower rates. Here’s a comprehensive breakdown on average loan offers:

Loan Term Offers for the Average 3-Year Personal Loan ($10,328), May 2018
Credit Score Range Average APR Offers
760+ 7.55%-16.38%
720-759 10.69%-19.97%
680-719 17.19%-26.02%
640-679 24.46%-33.01%

Your credit score isn’t the only factor affecting your interest rate. Some online lenders with unconventional underwriting methods look at a wider range of data points than just your credit score. As a result, the rate an online lender offers you may look considerably different than the rate you see from a more traditional lender.

“Every lender is a little different in how they evaluate you, so you might be able to get better rates at different lenders” said David Green, chief product officer for Earnest.

How your personal loan rate is determined

There’s no such thing as a universal underwriting method and so how your rate is calculated will vary, depending on the lender and which type of loan you’re seeking.

However, in general, you’ll find that traditional lenders place a lot of weight on conventional credit metrics. For example, Discover looks at the information you disclose on your application, such as your household income, what credit bureaus have to say about you and which kind of loan terms you’ve selected, says Dan Matysik, vice president of Personal Loans at Discover.

“If someone is looking for a loan with the lowest interest rate possible, they may want to start by checking their FICO credit score,” said Matysik. “Ninety percent of top lenders, including Discover, incorporate a FICO credit score.”

Other lenders ask for more personal details in addition to your FICO score, such as your level of education and college major, and what’s in your checking or savings account. “We underwrite for the individual,” said Jungwon Byun, head of growth at Upstart. “We’re trying to use different data – even data that traditional lenders don’t use – so we can give you the lowest rates we can.”

Factors that may affect your APR, depending on the lender, include:

  • Your credit score: What appears on your credit report – or, conversely, what doesn’t appear – can have a big impact on the APR you’re offered. It could also make or break your application, so tending to your credit score and making sure it’s in the best shape possible is crucial.
  • Income: Lenders will also want to know whether you earn enough money to support your monthly payments. In particular, they will want to compare how much debt you already have compared to your annual income.
  • Your education and job history: If you work with an online lender, they may ask for more detailed information about the highest degree you’ve obtained, your college major, your work history and other personal details.
  • Your saving and spending habits: Some online lenders also ask for more comprehensive information about your savings and spending habits. They may even request access to your bank account so they can get a sense of how well you manage money.
  • Loan terms: When you apply for a personal loan, you’ll typically indicate whether you want a shorter-term loan, such as a 12-month installment loan, or a longer-term loan that lasts for several years. That can have a big impact on your interest rate. In general, you’ll find that the shorter the loan, the better the interest rate.
  • The prime rate: If you apply for a variable rate personal loan, your APR will be determined, in part, by this benchmark rate published by the Wall Street Journal. When the prime rate changes, lenders typically follow suit by resetting APRs on new and existing variable rate loans. Fixed-rate loans, by contrast, usually carry the same APR throughout the life of the loan.
  • How you plan to pay for your loan: Some lenders will give you a discount on your APR if you sign up for automated payments.

6 ways to get a lower personal loan rate

Some factors that affect your personal loan rate may be out of your control. For example, if you’re fairly new to using credit, you may have a harder time securing an ideal rate. However, there are steps you can take to boost your chances of receiving an affordable APR. For example:

Cultivate a higher credit score: Pay all your bills on time. Keep your balances low. Periodically ask for credit limit increases in order to boost your debt-to-income ratio. Apply for different types of credit, such as revolving credit and installment loans. Keep your oldest credit accounts open so that you have a longer credit history. It takes time, but tending to your credit hygiene can go a long way toward lowering your interest rates.

Stay trustworthy: Lenders aren’t going to offer you the most competitive rates if you have a history of stiffing other companies. It’s not just important to avoid having delinquencies placed on your credit reports. As lenders increasingly show interest in alternative, noncredit-related data, you’ll also want to avoid falling behind on other payments, such as phone bills and utilities.

Secure a bigger income: Asking for a raise, taking on a side gig or lining up a higher paying job can also boost your chances of earning a lower interest rate.

Increase your savings: If you’re interested in working with an alternative lender, then it’s a good idea to increase your savings and investments as much as possible so that you can confidently provide this information to lenders. For example, if your employer offers to match your 401(k) contribution, take them up on the offer and contribute as much as you can.

Manage your money wisely: You’ll also want to be able to prove to lenders who ask for more detailed financial information that you can limit your spending and save at least some of your income once your bills are out of the way. According to Earnest’s David Green, the more money you have in reserve compared to your income, the more likely you are to earn the best rates.

Ask a loved one for help: Alison Norris, CFP and advice strategist at SoFi, recommends looking into whether a loved one with a higher credit score would be willing to cosign the loan. “That might allow you to leverage two incomes and two financial profiles into one,” said Norris.

Bottom line

You can’t choose your personal loan rate, but you can improve your chances of getting the best possible APR by carefully tending to your finances and comparing your options.

Be realistic about the rates you’ll probably get. But don’t give up if you’re offered a disappointing APR. Just because one lender offers you an above-average interest rate doesn’t mean every lender will.

Interested in a personal loan?

LendingTree allows you to compare rates from multiple lenders by filling out one easy form. Advertiser Disclosure

Student Loan Hero Advertiser Disclosure

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.

Advertiser Disclosure

Student Loan Hero Advertiser Disclosure

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.

RATES (APR)loan amount
5.99% – 17.88%1 $5,000 to $100,000
5.69% – 35.99% $1,000 to $50,000
6.98% – 35.89%* $1,000 to $50,000
5.99% – 24.99%3 $5,000 to $35,000
5.99% – 29.99%4 $7,500 to $40,000
15.49% – 35.99% $2,000 to $25,000
compare rates on Lendingtree now
1 Includes AutoPay discount. Important Disclosures for SoFi.

SoFi Disclosures

  1. Fixed rates from 5.99% APR to 17.88% APR (with AutoPay). Variable rates from 6.49% APR to 14.70% APR (with AutoPay). SoFi rate ranges are current as of November 4, 2019 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. See APR examples and terms. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 6.49% APR assumes current 1-month LIBOR rate of 1.81% plus 3.08% margin minus 0.25% AutoPay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.
  2. To check the rates and terms you qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull.
    See Consumer Licenses.
  3. Minimum Credit Score: Not all applicants who meet SoFi’s minimum credit score requirements are approved for a personal loan. In addition to meeting SoFi’s minimum eligibility criteria, applicants must also meet other credit and underwriting requirements to qualify.
  4. If you lose your job through no fault of your own, you may apply for Unemployment Protection. SoFi will suspend your monthly SoFi loan payments and provide job placement assistance during your forbearance period. Interest will continue to accrue and will be added to your principal balance at the end of each forbearance period, to the extent permitted by applicable law. Benefits are offered in three month increments, and capped at 12 months, in aggregate, over the life of the loan. To be eligible for this assistance you must provide proof that you have applied for and are eligible for unemployment compensation, and you must actively work with our Career Advisory Group to look for new employment. If the loan is co-signed the unemployment protection applies where both the borrower and cosigner lose their job and meet conditions.
  5. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)
2 Includes AutoPay discount. Important Disclosures for Payoff.

Payoff Disclosures

  1. All loans are subject to credit review and approval. Your actual rate depends upon credit score, loan amount, loan term, credit usage and history. Currently loans are not offered in: MA, MS, NE, NV, OH, and WV.
3 Important Disclosures for FreedomPlus.

FreedomPlus Disclosures

  1. All loans available through FreedomPlus.com are made by Cross River Bank, a New Jersey State Chartered Commercial Bank, Member FDIC, Equal Housing Lender. All loan and rate terms are subject to eligibility restrictions, application review, credit score, loan amount, loan term, lender approval, and credit usage and history. Eligibility for a loan is not guaranteed. Loans are not available to residents of all states – please call a FreedomPlus representative for further details. The following limitations, in addition to others, shall apply: FreedomPlus does not arrange loans in: (i) Arizona under $10,500; (ii) Massachusetts under $6,500, (iii) Ohio under $5,500, and (iv) Georgia under $3,500. Repayment periods range from 24 to 60 months. The range of APRs on loans made available through FreedomPlus is 5.99% to a maximum of 29.99%. APR. The APR calculation includes all applicable fees, including the loan origination fee. For Example, a four year $20,000 loan with an interest rate of 15.49% and corresponding APR of 18.34% would have an estimated monthly payment of $561.60 and a total cost payable of $7,948.13. To qualify for a 5.99% APR loan, a borrower will need excellent credit on a loan for an amount less than $12,000.00, and with a term equal to 24 months. Adding a co-borrower with sufficient income; using at least eighty-five percent (85%) of the loan proceeds to directly pay off qualifying existing debt; or showing proof of sufficient retirement savings, could help you also qualify for the lowest rate available.
* Important Disclosures for Upgrade Bank.

Upgrade Bank Disclosures

* Personal loans made through Upgrade feature APRs of 6.98%-35.89%. All personal loans have a 1.5% to 6% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay and paying off a portion of existing debt directly. For example, if you receive a $10,000 loan with a 36-month term and a 17.98% APR (which includes a 14.32% yearly interest rate and a 5% one-time origination fee), you would receive $9,500 in your account and would have a required monthly payment of $343.33. Over the life of the loan, your payments would total $12,359.97. The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early. Personal loans issued by WebBank, Member FDIC.

** Accept your loan offer and your funds will be sent to your bank via ACH within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes this transaction. From the time of approval, funds should be available within four (4) business days.

Published in

You're on your way...

You are being redirected to LendingTree.com where you’ll be able to fill out an online form. Based on your creditworthiness, you may be matched with up to five different personal loan lenders in our partner network.