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Personal loan rates rose last week. Yet, it’s still possible for highly qualified borrowers to pick up a reasonable interest rate on a personal loan. If you’re interested in financing a major purchase or project, it’s a good time to shop for a loan.
From June 13 to June 17, the average fixed rate on a three-year personal loan was 10.96% for borrowers with a credit score of 720 or higher who prequalified on Credible.com’s personal loan marketplace. The rate was 10.84% the previous week, according to Credible.com. The average rate on a five-year personal loan fell 0.59% last week to 12.74% from 13.33%.
Remember, well-qualified borrowers may receive rates significantly lower than average. The rate you’ll actually receive depends on numerous factors, like your creditworthiness and the loan you choose.
Related: Best Personal Loans
Getting the Best Rates
Your credit is a big factor in the rates you receive. According to Rod Griffin, senior director of consumer education and advocacy at Experian, “checking your credit report and scores three to six months before you apply for a personal loan” is a good idea. This gives you enough time to make any necessary fixes.
A credit score of 720 or better will typically get you the best terms. If you’re not quite in that credit score range, consider taking action to improve your credit score. Pay down existing debt to lower your credit utilization ratio, remove errors from your credit report and pay your bills early or on time.
How to Calculate Your Personal Loan Payments
To see if it fits into your budget, it’s important to estimate how much you’ll pay on a monthly basis—and how much you’ll pay in interest over the life of the loan. One of the easiest ways to do this is with a personal loan calculator. You’ll need your loan rate, term and amount.
Let’s say you get a three-year, $5,000 personal loan at a fixed rate of 10.96%. You’d pay about $164 monthly and approximately $890 in interest over the life of the loan, according to the Forbes Advisor personal loan calculator. You’d pay $5,890 in total over those three years, which includes both principal and interest.
Average Personal Loan Interest Rates by Credit Score
The rates below are average estimated personal loan interest rates according to VantageScore risk tiers, according to Experian. Though the rates below can serve as a general guideline, note that interest rates are ultimately set and determined by lenders.