May 16, 2022—Rates Fall By 0.17% – Forbes Advisor


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Good news for borrowers. Last week, rates on personal loans inched down. This means if you’re in the market for a personal loan, whether to finance a project or major purchase, you can grab a decent interest rate, so long as you’re a qualified borrower.

For borrowers with a credit score of 720 or higher who prequalified on Credible.com’s personal loan marketplace, the average interest rate on a three-year personal loan was 10.85% from May 9 to May 13. According to Credible.com, that’s a 0.17% drop from the previous week. The average rate on a five-year personal loan rose 0.37% last week to 13.18% from 12.81%.

Remember, well-qualified borrowers may receive rates significantly lower than average. The rate you’ll actually receive depends on various 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.

For example, let’s say you have a personal loan with a $5,000 loan amount, 10.85% fixed interest rate and a term of 36 months. The Forbes Advisor personal loan calculator shows your monthly payment would be around $163 and you’d pay roughly $880 in interest over the life of the loan. Overall, you would owe $5,880, which includes both principal and interest.

Average Personal Loan Interest Rates by Credit Score

Here are the average estimated interest rates for personal loans based on VantageScore risk tiers, according to Experian. Please note that interest rates are determined and set by lenders. The rates provided are estimations.

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