Interest rates on personal loans continue to fall

Our goal here at Credible Operations, Inc., NMLS Number 1681276, referred to as “Credible” below, is to give you the tools and confidence you need to improve your finances. Although we promote products from our partner lenders who compensate us for our services, all opinions are ours.

The latest trends in interest rates for personal loans from the Credible market are updated every week. (iStock)

Well-credited borrowers seeking personal loans over the past seven days tended to have lower interest rates compared to the previous seven days’ fixed-rate loans.

For borrowers with credit scores of 720 or higher who used the Credible marketplace to choose a lender between December 2 and December 9:

  • Interest rates on 3-year fixed rate loans averaged 11.16%, up from 11.26% in the previous seven days and 11.28% a year earlier.
  • The interest rates on five-year fixed rate loans averaged 13.94%, up from 14.31% in the previous seven days and 14.75% a year earlier.

Personal loans have become a popular way of consolidating and repaying credit card debt and other loans. They can also be used to cover unexpected expenses such as medical bills, caring for a large market or financing home improvement projects.

Interest rates on personal loans were reduced for both 3-year and 5-year fixed terms. While interest rates for a 3-year period decreased by only 0.10%, 5-year interest rates decreased by 0.37%. Interest rates for a five-year term also have more dramatic daily fluctuations, sometimes changing by almost a full percentage point overnight. Borrowers can benefit from significant interest savings with either a personal 3-year fixed rate loan or a 5 year personal fixed rate loan at the moment.

Whether a personal loan is right for you often depends on many factors, including the rate at which you can qualify. Comparing multiple lenders and their interest rates could help you get the best possible personal loan for your needs.

It is always a good idea to compare sites like Credible to understand how eligible you are and choose the best option for you.

The following are the latest trends in personal loan interest rates from the Credible market, which are updated every month.

Trends in weekly personal loan interest rates

The chart above shows the average default interest rates for borrowers with a credit rating of 720 or higher who used the Trusted Marketplace to choose a lender.

For the month of November 2021:

  • Interest rates on 3-year personal loans averaged 11.32%, down from 11.33% in October.
  • Interest rates on 5-year personal loans averaged 14.25%, up from 13.85% in October.

Personal loan interest rates vary considerably depending on the credit score and the duration of the loan. If you are wondering what kind of personal loan interest rates you can qualify for, you can use an online tool like Credible to compare options from different lenders. Checking your prices will not affect your credit score.

In November, the average default interest rate chosen by borrowers was:

  • 8.92% for borrowers with a credit rating of 780 and above who choose a 3-year loan
  • 29.04% for borrowers with a credit score below 600 who choose a 5-year loan

All market lenders in the market offer fixed rate loans at competitive prices. Because lenders use different methods to evaluate borrowers, it is a good idea to ask for personalized loan rates from many lenders so that you can compare your options.

Current interest rates on personal loans per credit score

Depending on factors such as your credit score, the type of personal loan you are looking for and the repayment period of the loan, the interest rate may vary.

As shown in the chart above, a good credit score can mean a lower interest rate and interest rates tend to be higher on loans with fixed interest rates and higher repayment terms.

How to get a lower interest rate

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

Credit score increase

In general, people with higher credit scores qualify for lower interest rates. Steps that can help you improve your credit score over time include:

  • Pay the bills on time. Payment history is the most important factor in your credit score. Pay all your bills on time for the amount owed.
  • Check your credit report. Look at your credit report to make sure there are no errors in it. If you find errors, dispute them with your credit bureau.
  • Reduce your credit score. Repaying credit card debt can improve this important credit score factor.
  • Avoid opening new credit accounts. Apply and open only credit accounts that you really need. Too much hard research on your credit report in a short period of time could lower your credit score.

Choose a shorter loan term

The terms of repayment of personal loans can vary from one to several years. In general, lower terms are accompanied by lower interest rates, as the lender’s money is at risk for a shorter period of time.

If your financial situation allows, applying for a shorter term could help you set a lower interest rate. Keep in mind that the short term does not only benefit the lender – by choosing a shorter repayment period, you will pay less interest over the life of the loan.

Get a co-signer

You may be familiar with the concept of cosigner if you have student loans. If your credit is not good enough to qualify for the best personal loan interest rates, finding a co-signer with good credit will help you secure a lower interest rate.

Just remember, if you default on the loan, your co-signer will be ready to repay it. Co-signing a loan could also affect their credit score.

Compare interest rates from different lenders

Before applying for a personal loan, it is a good idea to shop around and compare offers from many different lenders to get the lowest interest rates. Online lenders usually offer the most competitive rates – and can repay your loan faster than a brick-and-mortar installation.

But do not worry, comparing prices and terms does not have to be a time consuming process.

Credible makes it easy. Just enter how much money you want to borrow and you will be able to compare multiple lenders to choose the one that makes the most sense for you.

About Credible

Credible is a multi-lender marketplace that enables consumers to discover financial products that best suit their unique circumstances. Credible mergers with top lenders and credit bureaus allow consumers to quickly compare accurate, personalized loan options – without compromising their personal information or credit score. The reliable market provides an unrivaled customer experience, as reflected from above 4,500 positive reviews Trustpilot and TrustScore 4.7 / 5.

Leave a Comment