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Last week, rates on personal loans moved lower. So long as you’re a qualified borrower, you pick up a decent interest rate. For many, this means financing a major purchase or project is within reach.
From June 10 to June 15, the average fixed rate on a three-year personal loan was 15.48% for borrowers with a credit score of 720 or higher who prequalified on Credible.com’s personal loan marketplace. The rate was 15.80% the previous week, according to Credible.com. The average rate on a five-year personal loan fell 0.55% last week to 18.76% from 19.31%.
Remember, well-qualified borrowers may receive rates significantly lower than average. The rate you’ll actually receive depends on several factors, like your creditworthiness and the loan you choose.
These rates are accurate as of June 17, 2024.
Related: Best Personal Loans
How To Get the Best Rates
Two quick ways to help you receive more favorable rates include paying down existing debt to help lower your DTI and improving your credit score. The interest rate your receive on a personal loan is based on a number of factors. This includes your overall creditworthiness, credit score, income and debt-to-income (DTI) ratio.
While qualification requirements differ across lenders, a minimum credit score of 720 will typically yield you the best terms. If your score falls below this marker, and you’re on a quest for the lowest rate possible, you can take action to improve your score. Try strategies like lowering your credit utilization ratio, removing errors from your credit report and paying your bills early or on time.
Estimate Your Personal Loan Payments
Once you have an idea of your personal loan interest rate, you can calculate your monthly payments. You will need to enter your loan’s interest rate, amount and term. This will help you determine how much you’ll owe monthly and how much you’ll pay in interest over the life of your loan.
For example, let’s say you get a $5,000 personal loan with a term of five years at a fixed interest rate of 18.76%. You’d pay about $129 monthly and roughly $2,743 in interest over the life of the loan, according to the Forbes Advisor personal loan calculator. Overall, you’d pay $7,743 in total, which includes both principal and interest.
