Is a 10% APR good?

The best personal loan interest rates vary a lot over time and depend on several factors, including the applicant’s credit score, income, monthly housing payment and existing debt obligations. The loan term and amount have an impact, too, as does the overall economic climate.

The average APR for a 24-month personal loan was 10.07% as of December 2019, according to the most recent data available from the Federal Reserve Bank of St. Louis. By definition, the best personal loan rates have to be below average, so 10% is a good benchmark to beat. That average has gone up a bit in recent years, after bottoming at 9.45% in Nov. 2016. But personal loans rates are still 50% lower than they were in the 1980s.… read full answer

Below, you can see some average personal loan interest rates broken down by credit score. You can check your latest credit score for free on WalletHub to find out exactly where you stand.

Average Personal Loan Rates by Credit Score

Source: LendingTree, 2019

As you can see, the better your credit score is, the more you can expect to borrow with a personal loan, and the lower your finance charges should be. So the keys to saving money are to get your credit in the best shape possible and compare offers in order to identify the best terms you can qualify for.

Your free WalletHub account provides customized credit improvement advice, along with personalized recommendations for offers likely to save you money.

It’s easy to compare personal loan rates, which is good because doing so is essential to finding the best loan offers. Personal loan rates can range all the way from 6% to 36%, and they sometimes reflect more than just interest charges. The rates advertised for personal loans are actually annual percentage rates (APRs). Technically, the difference is that APRs include both interest and fees. However, origination fees are the most common type of personal loan fee, and they’re not always factored into the APR. So it’s important to confirm you’re comparing apples to apples when comparing personal loan rates.… read full answer

The best way to compare personal loan rates is to use WalletHub’s personal loans search tool to quickly see what some of the most popular lenders offer. On the left side of the page, you can filter the results by your credit score, desired loan amount, desired loan length and location. You’ll also be able to see additional details about the loans, such as estimated fees and monthly payments.

Using the search tool will give you a general idea of what options you can pursue and what rates are available. The next step is to check for pre-qualification. WalletHub’s free pre-qualification tool will tell you which lenders are likely to approve you, plus an estimate of what your rates would be if you’re approved.

After you compare the personal loan rates you’re pre-qualified for, you’ll typically want to apply for the loan with the lowest estimated rate. However, interest rates aren’t the only factor you should consider. If you’ll have to pay a large origination fee, for example, a slightly lower rate might not be worth it (assuming that fee isn’t already factored into the APR). And if the lender doesn’t offer loans as large as the one you need, you’ll want to rule it out. While interest rates are probably the most important consideration when it comes to a personal loan, you shouldn’t base your decision on them alone.

A good interest rate on a personal loan is 2.49% to 9%. The average APR for a two-year personal loan from a bank is 9.46%, according to the Federal Reserve, and the best personal loans have APRs as low as 2.49% for the most creditworthy borrowers. The rates you get will depend heavily on your credit, income, debt and other financial factors.… read full answer

The best way to get a decent interest rate on a personal loan is to comparison shop and get pre-qualified. WalletHub’s free personal loan pre-qualification tool helps you see which lenders have a high chance of approving you, as well as what interest rates you are likely to get if approved. You can then compare your pre-qualified offers to see what a good interest rate on a personal loan is for you personally.

Good Interest Rate on a Personal Loan by Credit Level

1. For excellent credit (A score of 750 or above)

   You may be able to get interest rates as low as 4% - 7%. That’s where the majority of lenders set their minimums.

2. For good/fair credit (A score of 640 to 749)

   You’re unlikely to get the lowest interest rates available, nor should you have to pay lenders’ maximums. Look at lenders’ credit score requirements; the higher your score is above their minimum, the better your chances of getting a lower rate.

3. For bad credit (A score of 639 or below)

   You probably won’t find rates lower than 25% to 36% from a bank or online lender. But personal loans from federal credit unions are capped at 18%.

If you’re planning on consolidating debt, a good interest rate on a personal loan is one that’s significantly lower than the rates on your existing debt. But as you compare personal loan interest rates, don’t neglect other terms.

A low interest rate might not be as great as it seems if you also have to pay costly fees to go along with it. For example, many lenders charge “origination fees” of 1% to 6% of the loan amount as an extra cost for opening the loan.