Borrowers with good credit seeking personal loans were prequalified for rates that were lower for 5 year fixed-rate loans and higher for 3 year fixed-rate loans during the past seven days, compared to the previous seven days.
For borrowers with credit scores of 720 or higher who used the Credible marketplace to select a lender between Jan. 10 and Jan. 16:
Rates on 3 year fixed-rate loans averaged 11.45%, up from 11.07% the seven days before and up from 10.92% a year ago.
Rates on 5 year fixed-rate loans averaged 12.98%, down from 13.65% the previous seven days and 14.38% a year ago.
Personal loans are a good way to pay off credit card debt and other loans. They can be used to cover unexpected expenses like medical bills, take care of a major purchase or fund home improvement projects.
Rates for a 5 year loan dropped by more than half a percentage point, the second time in January that they have fallen so much. Since the beginning of 2022, personal loan rates have gone down, despite daily fluctuations. It depends on several factors, including what rate you can qualify for, to make sure a personal loan is right for you. Compare multiple lenders and their rates to make sure you get the best possible personal loan for your needs.
It's always a good idea to compare and contrast sites like Credible to see how much you qualify for and choose the best option for you.
Here are the latest trends in personal loan interest rates, updated weekly from the Credible marketplace.
The above chart shows average prequalified rates for borrowers with credit scores of 720 or higher who used the Credible marketplace to select a lender.
The rate of 3 year personal loans was 11.29%, down from 11.32% in November.
Rates on 5 year personal loans averaged 14.12%, down from 14.25% in November.
Credit score and loan term can affect the rates on personal loans. If you want to compare and contrast options from different private lenders, you can use an online tool like Credible to find out what kind of personal loan rates you may qualify for. In December, the average prequalified rate selected by borrowers was
8.92% of borrowers with credit scores of 780 or above will choose a 3 year loan.
For borrowers with credit scores below 600, 29.04% will choose a 5 year loan.
All Credible marketplace lenders offer fixed-rate loans at competitive rates. It is a good idea to get personal loan rates from multiple lenders so you can compare your options, because lenders use different methods to evaluate borrowers.
The interest rate can vary depending on factors such as your credit score, what type of personal loan you are seeking and the loan repayment term.
A good credit score can lead to a lower interest rate and rates tend to be higher on loans with fixed interest rates and longer repayment terms, as shown in the chart above.
How can I get a lower interest rate?
There are a number of factors that influence the interest rate a lender might give you on a personal loan. You can increase your chances of getting a lower interest rate by taking some steps. People with higher credit scores qualify for lower interest rates. How can I improve my credit score over time?
Payment history is the most important factor in your credit score. Pay all your bills on time for the amount due.
You should look at your credit report to make sure there are no errors on it. If you find errors, you can dispute them with the credit bureau.
You can reduce your credit utilization ratio. Paying down credit card debt can improve this important credit-scoring factor.
You can only open and apply for credit accounts you need. Too many hard inquiries on your credit report in a short amount of time could lower your credit score.
Personal loan repayment terms can vary from one to several years. Since the lender's money is at risk for a shorter period of time, shorter terms tend to have lower interest rates.
If your financial situation allows, applying for a shorter term could help you score a lower interest rate. The shorter term doesn't just benefit the lender - by choosing a shorter repayment term, you're paying less interest over the life of the loan.
If you have student loans, you may be familiar with the concept of a cosigner. If your credit isn't good enough to qualify for the best personal loan interest rates, finding a cosigner with good credit could help you get a lower interest rate.
If you default on the loan, your cosigner will be on the hook to repay it. Credit score could be affected by cosigning for a loan.
Before applying for a personal loan, it is a good idea to shop around and compare offers from several different lenders to get the lowest rates. Online lenders are more competitive and can be quicker to disburse your loan than a brick-and- mortar establishment.
But don't worry, comparing rates and terms doesn't have to be a time-consuming process.
Credible makes it easy to use. You can compare multiple lenders to choose the one that makes the most sense for you by entering how much you want to borrow.
Credible is a multi-lender marketplace that allows consumers to find financial products that are the best fit for their unique circumstances. Credit bureaus and credit bureaus allow consumers to compare and contrast loan options without putting their personal information at risk or affecting their credit score. Over 4,500 positive Trustpilot reviews and a TrustScore of 4.7 5 indicate the Credible marketplace's unrivaled customer experience.