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.
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
- For excellent credit: You may be able to get interest rates as low as 4% - 7%. That’s where the majority of lenders set their minimums.
- For good/fair credit: 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.
- For bad credit: 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.
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