Personal loan interest rates are rising, but still much lower than in the same period last year

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Our goal here at Credible Operations, Inc., NMLS 1681276, hereinafter referred to as “Credible”, is to provide you with the tools and confidence you need to improve your finances. Although we promote the products of our lender partners, all opinions are ours.

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The latest trends in personal loan interest rates in the Credible market are updated weekly. (iStock)

Borrowers with a good loan search personal loans during the week of 23 August 2021, it was prequalified at rates that increased by both 3- and 5-year maturities compared to the fixed rate loans in the previous week.

For borrowers with a credit rating of 720 or higher who used the Credible market to select a lender during the week of Aug 23:

  • Interest rates on 3-year fixed-rate loans averaged 11.44%, up from 11.34% a week earlier and lower from 12.05% a year earlier. Last year, 3-year personal loan rates hit their lowest during the week of August 3, 2020, when they averaged 10.45%.
  • Interest rates on 5-year fixed-rate loans averaged 13.89%, up from 13.76% a week earlier and lower from 15.60% a year earlier. Interest rates on 5-year physical loans hit a 12.65% low over the past 12 months on the week of May 3, 2021.

Personal loans have become a popular way consolidate and pay off credit card debt and other loans. They can also be used to cover unexpected expenses such as Medical bills, take care of a large purchase or finance home improvement projects

Although interest rates on personal loans increased, they remained relatively low during August and significantly lower than at that time last year. It can still be a good time for borrowers to get a lower interest rate when using a personal loan to refinance other high interest rate debt.

Whether a personal loan is right for you often depends on many factors, including what rate you can qualify for. Comparing several lenders and their rates can help ensure that you get the best personal loan for your needs.

Always helpful comparison shop on sites like Credible to understand what you are applying for and choose the best one for you.

Here are the latest monthly personal loan interest rate trends in the Credible market.

Dynamics of weekly rates for individual loans

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The chart above shows the average prequalification rates for borrowers with a credit rating of 720 or higher who used the Credible market to select a lender.

For July 2021:

  • Rates on 3-year individual loans averaged 11.35%, up from 12.15% in June and 11.43% a year ago.
  • Rates on 5-year individual loans averaged 13.67%, up from 13.46% in June and lower from 15.60% a year earlier.

The rates for personal loans vary considerably depending on the credit rating and the term of the loan. If you are wondering what personal loan rates you can qualify for, you can use an online tool like Credible compare options from different private lenders. Checking rates will not affect your credit score.

All lenders in the Credible market offer fixed rate loans at competitive rates. Since lenders use different methods to evaluate borrowers, it is a good idea to request personal loan rates from multiple lenders so that you can compare your options.

Current rates on loans to individuals by credit rating

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Depending on factors such as your credit rating, the type of personal loan you are looking for, and the maturity of the loan, the interest rate may differ.

As shown in the chart above, a good credit rating can mean a lower interest rate, and rates tend to be higher for loans with fixed interest rates and longer maturities.

How to get a lower interest rate

Many factors affect the interest rate that a lender can offer you on an individual loan. But there are some steps you can take to improve your chances of getting a lower interest rate. Here are some tactics to try.

Increase your credit rating

Generally, people with higher credit ratings are eligible for lower interest rates. Steps to help you improve your credit rating over time include:

  • Pay your bills on time. Payment history is the most important factor in your credit score. Pay all your bills on time for the amount due.
  • Check your credit report. Check your credit report to make sure there are no mistakes. If you find mistakes, discuss them with the credit bureau.
  • Lower your loan utilization rate. Paying off credit card debt can improve this important credit rating factor.
  • Avoid opening new credit accounts. Apply and open only those credit accounts that you really need. Too many complex queries on your credit report in a short amount of time can lower your credit score.

Choose a shorter loan term

Individual loan repayment terms can vary from one year to several years. Generally, shorter terms will imply lower interest rates as the lender’s money is at stake for a shorter period of time.

If your financial situation allows, applying for a shorter period can help you get a lower interest rate. Keep in mind that a shorter term is not only beneficial to the lender – by choosing a shorter maturity, you will pay less interest over the life of the loan.

Get a curator

If you have student loans, you might be familiar with the concept of social media. If your credit is not good enough to qualify for the best personal loan interest rates, find an assistant with a good credit history can help you secure a lower interest rate.

Just remember that if you don’t pay off the loan, your partner will be on the hook to pay off. And getting a loan can also affect their credit rating.

Compare rates from different lenders

Before applying for a personal loan, it is advised to search and compare offers from several different lenders in order to get the lowest rates. Online lenders usually offer the most competitive rates – and can pay off your loan faster than conventional institutions.

But don’t worry, comparing rates and timing shouldn’t take long.

Trustworthy makes it easy. Just enter the loan amount and you can compare several lenders choose the one that suits you best.

About reliability

Credible is a multi-lending marketplace that allows consumers to find financial products that are best suited to their unique circumstances. Credible’s integration with leading lenders and credit bureaus allows consumers to quickly compare accurate, personalized loan options without putting their personal information at risk or affecting their credit score. The Credible marketplace provides an unrivaled customer experience with more than 4,500 positive reviews on Trustpilot and a TrustScore 4.7 / 5.

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