Best Personal Loan Rates of May 2024

NerdWallet’s guide to getting the best personal loan rate

On this page

• What is a good personal loan rate?

• How lenders set personal loan rates

• Personal loan rates by credit score

• Personal loan rates by lender type

• How APR affects monthly payments

• How to get the best personal loan rate

• How to compare personal loan offers

• What to know about personal loans

• Frequently asked questions about personal loan rates

What is a good personal loan rate?

A personal loan’s annual percentage rate (APR) includes the interest rate plus any other fees a lender charges, like an origination fee. A good personal loan rate is the lowest one you qualify for, which depends heavily on your credit and financial information.

Because rates can vary widely between borrowers, it’s not helpful to compare your rate to someone else’s. Instead, pre-qualify for personal loans with multiple lenders to find the lowest rate and best terms.

• Bad-credit personal loan rates

  Lender	APR range
  Upstart	7.80% - 35.99%
  Upgrade	8.49% - 35.99%
  Avant	9.95% - 35.99%
  LendingPoint	7.99% - 35.99%
  Universal Credit	11.69% - 35.99%

  » MORE: Best loans for bad credit

• Good- and excellent-credit personal loan rates

  Lender	APR range
  PNC	7.49% - 30.49%
  PenFed	7.99% - 17.99%
  Citibank	10.49% - 19.49%
  LightStream	6.99% - 25.49%
  SoFi	8.99% - 29.99%
  Discover	7.99% - 24.99%
  Happy Money	11.72% - 17.99%

  » MORE: Best loans for good credit

• Debt consolidation loan rates

  Lender	APR range
  Discover	7.99% - 24.99%
  Happy Money	11.72% - 17.99%
  LightStream	6.99% - 25.49%
  SoFi	8.99% - 29.99%
  PNC	7.49% - 30.49%

  » MORE: Best loans for debt consolidation

• Home improvement loan rates

  Lender	APR range
  SoFi	8.99% - 29.99%
  Discover	7.99% - 24.99%
  LightStream	6.99% - 25.49%
  Wells Fargo	7.49% - 23.74%
  Rocket Loans	9.12% - 29.99%

  » MORE: Best loans for home improvement

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How lenders set personal loan rates

Macroeconomic conditions help personal loan lenders determine their rates. For example, changes in the wider economy (like high inflation and Federal Funds rate increases) prompted lenders to tighten their underwriting standards in 2022 and 2023, and they’ve remained high since then.

But personal loan rates often have wide ranges, and the specific rate you receive is based primarily on your credit and other financial information like income and outstanding debts.

» MORE: See this month’s average personal loan rates

The lowest rates go to borrowers with excellent credit, high incomes, little outstanding debt and long histories of on-time loan and credit card payments. Other factors that can influence your rate include education, occupation, the requested loan amount and loan purpose.

» MORE: Learn more about personal loan requirements

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Personal loan rates by credit score

Here are the average estimated APRs for online personal loans, based on credit score ranges:

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Personal loan rates by lender type

Personal loan rates from online lenders

Online personal loan rates vary by the type of borrower they target. Bad-credit online lenders may approve borrowers with lower credit scores, but they offer higher APRs to make up for the additional risk those borrowers may carry. Good- and excellent-credit online lenders offer lower rates because they only approve borrowers who they believe have a low risk of defaulting.

» MORE: What credit score do you need for a personal loan?

Personal loan rates at banks

Banks may offer competitive rates — and rate discounts if you’re already a customer — but they typically have tougher eligibility requirements than online lenders. The average rate for a two-year bank loan was 12.49% in the first quarter of 2024, according to the Federal Reserve.

» MORE: Best bank loans

Personal loan rates at credit unions

Credit union loans may carry lower rates than banks and online lenders, especially for those with fair or bad credit, and loan officers may be more willing to consider your overall financial picture.

The average rate charged by credit unions in the first quarter of 2024 for a fixed-rate, three-year loan was 10.83%, according to the National Credit Union Administration. Federal credit unions cap personal loan APRs at 18%.

You must become a member of a credit union to get a personal loan, which may mean paying a fee or meeting certain eligibility requirements.

» MORE: Credit union personal loans

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How APR affects monthly payments

Use this personal loan calculator to see how different rates — plus other factors, like loan amount and terms — can impact monthly personal loan payments.

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How to get the best personal loan rate

Your personal loan rate is primarily based on how confident a lender feels that you’ll repay the loan on time, which they determine by reviewing your credit and finances. The more likely a lender thinks you are to default, the higher the rate.

Here are nine tips to prepare for a loan application and get a low rate:

1. Boost your credit. Check your credit report for errors or accounts that may be weighing on your score and address them before applying. For example, a past-due account could be a reason a lender charges a high rate or denies your application.

2. Lower your debt-to-income ratio. Pay down existing debt to lower your DTI and show lenders that you have ample income for new loan payments. Make sure to include all sources of income on an application.

3. Ask for the minimum you need. Requesting a large loan could cause a lender to charge a higher interest rate. The additional debt increases your DTI and lenders may find it riskier than if you requested a smaller loan.

4. Shorten your repayment term. Lenders often charge lower APRs on shorter-term loans because a shorter term means there’s less time for your financial situation to change during repayment. Choose the shortest loan term you can while still keeping monthly payments affordable.

5. Get rate discounts. Many online lenders offer rate discounts for setting up automatic payments and some banks offer rate discounts to existing customers who hold certain bank accounts.

6. Find a no-fee lender. Origination fees are the most common personal loan fees, and they can drive up your APR, but not all lenders charge them. Compare fees and look for a lender with low or no fees.

7. Add a co-signer or co-borrower. Borrowers with blemished credit can add a co-signer or co-borrower with better credit and higher income to get a lower rate. Both co-signers and co-borrowers are responsible for repaying the debt if the primary borrower misses payments.

8. Add collateral. You may qualify for a personal loan or get a lower rate by pledging collateral like a vehicle or savings account. With a secured loan, the lender can take the collateral if you default.

9. Pre-qualify and compare offers. Many lenders offer pre-qualification, which lets you preview the potential loan amount, rate and repayment term without affecting your credit score. Pre-qualify with multiple lenders to compare offers and select the best rate. 

» Get started: Pre-qualify on NerdWallet

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How to compare personal loan offers

After you’ve pre-qualified with multiple lenders, consider these features to choose the best offer.

Annual percentage rate. If you’re looking for the lowest rate, compare APR, not just interest rate. APR is the best apples-to-apples cost-comparison tool because it represents the full cost of borrowing. Use it to compare personal loans as well as other financial products, such as credit cards.

Loan amount. Many lenders provide small to mid-sized loans, from $2,000 to $50,000, but a few offer loan amounts up to $100,000. Consider your goal for the loan and only borrow what you need.

Monthly payments. It’s important to feel confident that you can afford a loan’s monthly payments because missing a payment can result in late fees and a decreased credit score. Many lenders show the loan’s monthly payment during pre-qualification, but you can also use a personal loan calculator to estimate monthly payments.

Repayment term. Shorter-term loans have higher monthly payments but lower total interest costs, while longer-term loans have lower monthly payments and higher interest costs. Try to strike a balance between paying less interest and keeping monthly payments affordable.

Fees. Some lenders charge an origination fee to cover the cost of processing a personal loan. Other fees you might encounter include late fees for missing payment due date and nonsufficient funds fees for authorizing a payment when there’s not enough money in your account to cover the bill.

Borrower perks. Special perks such as well-rated mobile apps, hardship programs or the ability to change payment due dates may help you choose between two otherwise similar loan offers.

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What to know about personal loans

What is a personal loan and how does it work?

A personal loan is a type of installment loan that you can use for almost any purpose. You get a lump sum of money and pay it back, with interest, in fixed monthly payments. Unlike auto and mortgage loans, personal loans are usually unsecured and not backed by collateral the lender can take if you fail to repay it.

What can you use a personal loan for?

You can use a personal loan for almost anything. Here are a few common reasons to get a personal loan:

• Debt consolidation.

• Credit card refinancing.

• Home improvement projects.

• Emergency expenses.

• Medical bill payments.

• Weddings.

• Vacations.

Personal loan pros and cons

» MORE: Personal loan pros and cons

4 steps to get a personal loan

1. Check your credit and budget. Lenders consider factors such as your credit score, credit history, income and existing debts on a personal loan application. If you have a low score or high DTI, it may be worth your time to build your credit and pay down debt before applying for the best chance at a low rate.

2. Pre-qualify with multiple lenders. Pre-qualifying triggers a soft credit pull, so you can do it multiple times without affecting your score. A lender usually only does a hard credit pull once you submit a formal application.

3. Compare loan offers. Compare features on pre-qualified loan offers like APR, repayment terms and monthly payment amounts to determine which best fits your needs.

4. Complete a formal application. When you’re ready to apply, gather documents such as your Social Security number, government-issued ID, payroll stubs and tax returns to speed up the process. Lenders typically approve or decline applications within a couple of days and fund approved loans within a week, though some move faster. If your application is denied, the lender must tell you why. 

» MORE: How to get a personal loan

How to manage personal loan payments

Your first personal loan payment is typically due 30 days after getting the loan. Future bills will be due the same time each month until the end of your loan term.

Add the new loan payment to your monthly budget, if you use one, and set up automatic payments to avoid missing a payment, which can trigger a late fee and impact your credit score. Some lenders even provide rate discounts for enrolling in autopay.

» MORE: How to manage personal loan payments

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Frequently asked questions about personal loan rates

• What’s the difference between a personal loan APR and interest rate?

  APR and interest rate are so similar they’re often used interchangeably, but on personal loans there’s an important distinction. A personal loan APR includes the interest rate plus any origination fee. According to the Truth in Lending Act, all lenders must disclose a loan’s APR before you sign an agreement.

• Can you refinance a personal loan to get a lower rate?

  If you currently have a personal loan with a high rate, you may be able to lock in a lower rate by refinancing a personal loan, especially if you’ve improved your credit or lowered your debt since you first borrowed. Lenders have different refinancing policies: Some allow borrowers to refinance a personal loan you have with them, but others may require you to refinance with a different lender.

  If you refinance, be mindful of the new loan’s term. Even with a lower rate, a longer repayment term could raise the total interest costs.

• What are some alternatives to personal loans?

  Other ways to borrow money include:

  • 0% APR credit cards

  • Personal line of credit

  • Home equity loan or HELOC

  • 401(k) loan

  • Family loan