What Is a Good Interest Rate on a Personal Loan? (2024 Guide) (2024)

FAQs

What is a good interest rate for a personal loan right now? ›

When will interest rates go down? The Federal Reserve has indicated that there's a good chance it would cut rates later in 2024.

As mentioned above, people with higher credit scores should qualify for loans at better rates. If you have a credit score of 750, 36% interest rate would be a considered a higher interest rate -- but if your score is 580, this would likely be a very good interest rate based on your credit history.

Avoid loans with APRs higher than 10% (if possible)

According to Rachel Sanborn Lawrence, advisory services director and certified financial planner at Ellevest, you should feel OK about taking on purposeful debt that's below 10% APR, and even better if it's below 5% APR.

Erinn Dimond, Car Insurance Writer. Personal loan rates are so high because the Federal Reserve has increased its target interest rate 11 times since early 2022 in response to high inflation.

The high cost of borrowing is due to the Federal Reserve raising interest rates 11 times from March 2022 through July 2023. When the Fed started its tightening campaign, money was free. Its key short-term borrowing rate was 0%. Today, it's in a range of 5.25% to 5.5%, the highest level since 2001.

Is 7% high for a personal loan? ›

But depending on the lender, the borrower's credit score and financial situation and other factors, personal loan interest rates can generally range from under 6% to 36%—although higher interest rates aren't unheard of in states where it's allowed.

Refinancing might be a good option if you need to extend your repayment term or your credit score has improved and you're able to obtain a more competitive interest rate as a result. Securing a lower interest rate through a refinance reduces your cost of borrowing so you'll pay less on your personal loan overall.

Just like when it comes to negotiating your salary, if you don't ask for something better, you likely won't get it. Most lenders aren't going to just spontaneously offer you a better rate – you're going to have to ask for it. Of course, asking for a lower rate doesn't guarantee you'll get one.

The best personal loan rates are currently from 6.99% to 35.99%. Compare interest rates on personal loans from online lenders, banks and credit unions. The lowest rates go to borrowers with strong credit histories, high incomes and low existing debt.

National average: As of February 28, 2024, the average APR for a personal loan in India stands at approximately 12.10%. While this serves as a useful benchmark, your creditworthiness may qualify you for a more favourable rate. Credit score: Your credit score has the most significant impact on your APR.

Erinn Dimond, Car Insurance Writer. Personal loan rates are so high because the Federal Reserve has increased its target interest rate 11 times since early 2022 in response to high inflation.