Personal loans allow you to borrow money for almost any purpose, from consolidating high-interest credit card debt to financing home repairs or medical bills. Unlike credit cards, personal loans offer fixed interest rates and monthly payments, so they can be easier to budget for.
The best low-interest personal loans make borrowing more affordable by charging rates well below the average. With rates starting as low as 5.99%, the lenders in this post offer both competitive pricing and excellent customer service.
To compile this list, we compared over two dozen top lenders on factors including:
- Interest rates and fees
- Loan amounts and terms
- Credit score requirements
- Funding speed
- Customer experience
No matter your credit history or loan needs, you can likely find a low-rate personal loan from one of these top picks. Keep reading to compare your best options.
Best Low-Interest Personal Loans
| Lender | Interest Rates | Key Highlights |
| LendingClub | 5.99% – 35.89% | Large loans up to $40KNo origination fee |
| Lightstream | 4.99% – 19.99% | Loans up to $100KNo fees |
| PenFed | 6.49% – 17.99% | Credit union lendingTerms up to 5 years |
| SoFi | 5.99% – 20.28% | Unemployment protectionNo origination fee |
| Upstart | 5.68% – 35.99% | Easy online processLow rates for fair credit |
| Best Egg | 5.99% – 35.99% | Fast fundingCompetitive rates |
| Discover | 6.99% – 24.99% | Soft pull preapprovalsGood rewards program |
| Marcus | 6.99% – 19.99% | No feesEasy application |
| OneMain | 18.00% – 35.99% | Large loansFlexible terms |
| Upgrade | 5.94% – 35.97% | Instant decisionFast funding |
Below you’ll find more details on each of these top picks, including reviews of their rates, terms, eligibility, and application process. We break down who each lender is best suited for so you can find the right fit based on your financial situation.
Best for Balance Transfers: LendingClub
LendingClub stands out for offering low rates without an origination fee, making it one of the most affordable options for a personal loan. The lender is best for borrowers looking to consolidate high-interest debt through a balance transfer.
LendingClub Loan Details
- Fixed rates from 5.99% – 35.89% APR
- No origination fee
- $1,000 to $40,000 loan amounts
- 3 or 5 year terms
- Minimum credit score of 60
LendingClub offers better rates the higher your credit score, though they make loans available even to applicants with poor credit. You could qualify for rates as low as 6% APR with excellent credit.
Rates are also competitive for fair credit borrowers. Those with scores in the 600s may still see offers lower than 20% APR.
While LendingClub’s minimum loan is just $1,000, you can borrow up to $40,000. That makes their loans some of the largest available.
With no prepayment penalties, you’re free to pay off the loan early to save on interest. Loans have fixed 3 or 5 year terms.
Who Is LendingClub Best For?
The large loans with lengthy terms make LendingClub a solid pick for anyone looking to consolidate credit card balances. You can roll multiple cards into one loan at a lower rate.
LendingClub also approves more applicants than many traditional banks, so they are a smart option for fair credit borrowers who may not qualify elsewhere.
Just keep in mind that origination fees are tiered based on your loan amount and credit, ranging from 3% to 6%. While there’s no fee for excellent credit, you’ll pay more with lower scores.
Applying for a LendingClub Personal Loan
LendingClub has an easy online application that only takes a few minutes. To check your rate without a hard credit inquiry, you will need to provide:
- Your desired loan amount
- Estimated credit score
- Zip code
- Full name
- Birthdate
- Last four digits of your Social Security Number
After submitting these details, you’ll receive loan offers if approved. You can then complete the full application by providing:
- Your Social Security Number
- Income and employment information
- Housing expenses
- Government ID
- Bank account details
LendingClub offers fast funding. Most borrowers receive loan funds in their bank account in just 1-3 business days after approval.
Best for Large Loans: LightStream
LightStream offers some of the largest loans on the market, up to $100,000, with incredibly low rates. Approved borrowers enjoy fixed rates as low as 4.99% APR with autopay.
LightStream Loan Details
- Fixed rates from 4.99% – 19.99% APR with autopay discount
- Loans up to $100,000
- 2 to 12 year terms
- Minimum credit score of 660
LightStream offers loans from $5,000 up to $100,000, beating many competitor’s maximum limits. These sizable limits make their loans a great option to finance large expenses.
Their loans have fixed rates as low as 4.99% APR with autopay, along with moderate origination fees from 1% to 6% of your loan amount. There are also no prepayment penalties.
You’ll benefit from longer repayment terms up to 12 years. LightStream offers terms from 2 to 7 years for standard loans or 2 to 12 years for home improvement projects. The longer timeline keeps monthly payments low.
Who Is LightStream Best For?
With high borrowing limits and competitive rates, LightStream is an excellent choice for borrowers looking to finance major expenses. Their loans work for:
- Large home improvement projects
- Debt consolidation for high balances
- Major medical expenses
- Financing a wedding or adoption
- Making upgrades to rental properties
LightStream requires a minimum credit score of 660. Approval and your rate depend on your creditworthiness, income, and other financial factors.
Applying for a LightStream Loan
LightStream offers an online application where you’ll enter details on:
- Your loan requirements
- Income
- Employment
- Expenses
- Assets & liabilities
- Property information
You’ll get an instant decision after submitting your entire application. Qualified borrowers can have funds deposited as soon as the next business day.
LightStream also offers a unique rate-beat program. If you’re approved but find a lower published rate from another lender, they will beat your rate by 0.10% APR.
Best from a Credit Union: PenFed
PenFed Credit Union offers highly competitive rates as low as 6.49% APR. They are a great source for no fee personal loans with flexible terms.
PenFed Loan Details
- Fixed rates from 6.49% – 17.99% APR
- $600 to $50,000 loan amounts
- 1 to 5 year repayment terms
- Minimum credit score of 650
As a credit union, PenFed can offer rates below many banks and online lenders. Rates start at just 6.49% APR with the autopay discount.
Loan amounts range from $600 up to $50,000. PenFed also allows co-applicants if you need to meet the income requirements.
Repayment terms are from 1 to 5 years. The shorter terms allow you to get out of debt faster. PenFed has no early payoff penalties if you pay the loan off early.
READ ALSO: The Ultimate Guide to Boat Loans in 2023
Who Is PenFed Best For?
PenFed’s personal loans are a smart choice for borrowers who want to benefit from credit union lending. Their loans work well for:
- Debt consolidation
- Credit card refinancing
- Home improvement projects
- Auto repairs
- Medical bills
- Life events like weddings or adoption
To qualify for membership, you can join the PenFed foundation for a one-time $5 donation when you apply for a loan. Having good credit is key as well. PenFed requires a minimum credit score of 650.
Applying for a PenFed Personal Loan
Applying for a personal loan with PenFed Credit Union involves:
- Joining the credit union: You’ll need to open a savings account and become a member. This costs $5.
- Checking loan offers: You can check potential loan offers using PenFed’s online application form. It’s a soft pull that won’t affect your credit score.
- Completing the full application: After checking available offers, finish the application process to get final loan approval.
PenFed offers fast decisions and funding within 1 business day for many borrowers. If approved, loan funds are deposited to your PenFed savings account.
Best Unemployment Protection: SoFi
SoFi offers some of the lowest rates available, starting at just 5.99% APR. Their loans have no origination fee and come with unemployment protection.
SoFi Loan Details
- Fixed rates from 5.99% – 20.28% APR
- $5,000 to $100,000 loan amounts
- 2 to 7 year terms
- Minimum credit score of 680+
SoFi’s low rates and generous loan limits make them a top pick. Even borrowers with excellent credit (720 score and above) can qualify for rates under 10% APR.
You can borrow from $5,000 up to $100,000 and select repayment terms from 2 to 7 years. SoFi doesn’t charge an origination fee or prepayment penalties.
SoFi also offers unemployment protection that allows you to temporarily pause loan payments if you lose your job. They provide career coaching as well.
Who Is SoFi Best For?
SoFi personal loans work for borrowers who want the security of unemployment protection. Their loans also cater to:
- Those looking to consolidate high-interest debt
- Borrowers who need larger loans
- Anyone seeking competitive rates and flexible repayment
To qualify for the lowest rates, you’ll need a minimum credit score of 680. SoFi membership benefits are also available.
Applying for a SoFi Personal Loan
SoFi has a fast and easy online application process. Here are the steps:
- Prequalify to view estimated rates without affecting your credit score. No SSN needed.
- Complete the application by providing your SSN, income details, monthly expenses, and banking information.
- E-sign loan agreement if approved. SoFi offers fast funding in just 1-3 business days.
SoFi also lets you change your monthly due date and offers forbearance if you lose your job, enter school, or join the military. Their easy application process and borrower perks make getting a personal loan simple.
Best for Fair Credit: Upstart
Upstart uses alternative underwriting to make personal loans more accessible for fair credit borrowers. Rates start at just 5.68% APR.
Upstart Loan Details
- Fixed rates from 5.68% – 35.99% APR
- $1,000 to $50,000 loan amounts
- 3 or 5 year terms
- Minimum credit score of 580
Upstart looks beyond your credit score to consider your education and employment history in the approval process. This helps make Upstart loans available to more applicants.
Even with a credit score in the 600s, you may qualify for rates under 15% APR, much lower than options like credit cards. Loan amounts range from $1,000 up to $50,000.
You can choose a 3 or 5 year repayment term. Upstart also has no prepayment penalties, so you’re free to pay extra each month to pay off your loan faster.
READ ALSO: What’s the Average Personal Loan Interest Rate?
Who Is Upstart Best For?
Upstart is an excellent loan option for fair credit applicants. Upstart’s loans help borrowers with:
- Limited credit history
- Past credit mistakes
- Lower credit scores
Though you can get approved with a minimum credit score of 580, you’ll get the lowest rates with scores of 720 and above. Upstart personal loans provide affordable financing for credit building and debt consolidation.
Applying for an Upstart Personal Loan
Upstart offers fast, 100% online applications. Follow these steps:
- Complete the prequalification form to see your rate without a credit check.
- Provide details on your income, education, employment, monthly expenses, and government ID.
- Accept your loan offer if approved. Funds can arrive as soon as 1 business day after approval.
Upstart’s application only takes about 5 minutes. You can get prequalified without impacting your credit score.
Best for Fast Funding: Best Egg
Best Egg stands out for providing fast access to funds in as little as 1 business day. Their online process makes getting approved easy.
Best Egg Loan Details
- Fixed rates from 5.99% – 35.99% APR
- $2,000 to $50,000 loan amounts
- 3 to 5 year terms
- Minimum credit score of 640
Best Egg offers low rates for qualified borrowers. With great credit (720+ score), you may qualify for rates as low as 5.99% APR.
Loan amounts range from $2,000 to $50,000, providing sufficient limits for debt consolidation. Terms are between 3 to 5 years.
Best Egg has an online process that provides loan decisions quickly. They deposit funds via ACH for fast access, even as soon as the next business day after approval.
Who Is Best Egg Best For?
Best Egg’s personal loans provide quick access to funds, making them ideal for scenarios like:
- Paying emergency expenses
- Covering unplanned bills
- Funding home repairs
- Paying medical bills
They are also a smart financing option for applicants eager to consolidate high-interest credit card balances. Best Egg requires a 640 minimum credit score.
Applying for a Best Egg Personal Loan
You can complete Best Egg’s 100% online application in minutes. Here’s an overview:
- Enter your loan requirements – Just basic personal information required to check available offers.
- Provide financial details – Supply income, expenses, debts, and assets to verify eligibility.
- Accept loan agreement – Get funds sent quickly via ACH usually in 1-3 days.
Fast funding and competitive rates make Best Egg a top pick for easy access to cash when you need it.
Best Rewards: Discover
Discover offers rewards on personal loans that you can redeem for statement credits and more. Their soft pull preapprovals help you check your rate without hurting your credit.
Discover Loan Details
- Fixed rates from 6.99% – 24.99% APR
- $2,500 to $35,000 loan amounts
- 3 to 7 year terms
- Minimum credit score of 660
Discover offers competitive interest rates on personal loans, even for borrowers with good but not excellent credit. Customers earn rewards called Cashback Bonus on their monthly payments.
You can borrow from $2,500 up to $35,000 with Discover. Loan terms range from 3 to 7 years so you can spread out payments over time.
Discover checks preapprovals with a soft pull that won’t affect your credit score. There are also no origination fees.
Who Is Discover Best For?
Discover personal loans work well for borrowers who want to earn rewards on their monthly payments. Discover also suits:
- Balance transfers from high-rate debt
- Large purchases and life events
- Home renovations and repairs
To qualify for the lowest rates, you’ll need good to excellent credit. Discover requires a minimum score of 660. They have an easy online process.
Applying for a Discover Personal Loan
You can prequalify online with Discover without hurting your credit to see offers. If approved, Discover provides loan funds in as soon as 1 business day.
Follow these steps:
- Prequalify online by entering basic personal information.
- Complete application by providing your SSN, income, housing costs, and student loan debt.
- Accept your loan agreement with e-signature if approved. Discover provides fast access to funds.
Discover makes it easy to apply for one of the top rewards personal loans available. Borrowers can even have a cosigner when applying.
Best from an Online Bank: Marcus
Marcus by Goldman Sachs offers quick access to funds with competitive fixed rates and no fees. The lender provides an easy online application process.
Marcus Loan Details
- Fixed rates from 6.99% – 19.99% APR
- $3,500 to $40,000 loan amounts
- 3 to 6 year terms
- Minimum credit score of 660
Marcus offers fixed-rate loans with APRs as low as 6.99% for qualified borrowers. Even with imperfect credit in the mid to high 600s, you may find rates under 20%.
Loan amounts range from $3,500 up to $40,000, providing sufficient borrowing power for debt consolidation or major expenses. Marcus offers 3 to 6 year repayment terms.
A major benefit of Marcus is they don’t charge any origination or prepayment fees. This helps keep the cost of borrowing as low as possible.
Who Is Marcus Best For?
Marcus personal loans are a flexible borrowing option well-suited for:
- Debt consolidation and credit card refinancing
- Large purchases and home renovations
- Medical bills
To get approved and the lowest rates, you’ll need good to excellent credit. Marcus requires a minimum credit score of 660. They provide quick access to funds via electronic deposit.
Applying for a Marcus Personal Loan
Marcus has an easy online application process that looks like:
- Prequalify for rates – It only takes seconds to submit basic personal information for rate estimates.
- Apply by providing your SSN, income details, housing expenses, and bank account info.
- Get funding in as soon as 3 days once approved. There are no fees.
The quick application process and fee-free structure make Marcus a go-to for low-cost financing.
Best for Bad Credit: OneMain
OneMain Financial offers higher borrowing amounts for bad credit applicants with competitive rates. They have an easy application process with flexible terms.
OneMain Loan Details
- Fixed rates from 18.00% – 35.99% APR
- $1,500 to $20,000 loan amounts
- 2 to 5 year terms
- Minimum credit score of 550
OneMain Financial provides bad credit personal loans up to $20,000. They offer fixed-rate loans from 18.00% to 35.99% APR based on your creditworthiness.
You can spread out payments from 2 to 5 years. OneMain also has no prepayment penalties, so you can pay extra each month to pay off your balance faster.
Despite being a lender that specializes in bad credit, OneMain has competitive rates compared to alternatives like payday and title loans. They report payments to credit bureaus to help you build your score as you repay the loan.
Who Is OneMain Best For?
OneMain personal loans provide an accessible borrowing option if your credit needs improvement. OneMain suits borrowers who:
- Have a low or limited credit history
- Need to rebuild their credit score
- Require the higher loan amounts
- Want longer terms to lower their payments
A minimum 550 credit score is required. OneMain offers both secured and unsecured loans.
Applying for a OneMain Personal Loan
You can apply for a OneMain personal loan online, but will need to visit a branch to sign your loan documents. Here’s a summary:
- Prequalify online instantly without affecting your credit.
- Apply by providing documents that verify income, residency, and identity.
- Sign your loan by visiting a local OneMain branch. Then receive your funds.
OneMain offers a straightforward application process. They provide access to higher loan amounts for borrowers with less-than-perfect credit.
READ ALSO: Veterans United Home Loans 2023 Review: Your Ultimate Guide
Best Instant Approval: Upgrade
Upgrade offers an instant online approval process. Within minutes, you can have a decision on a competitive fixed-rate loan up to $50,000.
Upgrade Loan Details
- Fixed rates from 5.94% – 35.97% APR
- $1,000 to $50,000 loan amounts
- Terms from 2 to 7 years
- Minimum credit score of 580
Upgrade uses a proprietary underwriting model that looks at more than your credit score to provide quick decisions. Even borrowers with fair credit (scores in the low 600s) may qualify for APRs under 20%.
You can borrow from $1,000 up to $50,000 and select a repayment term from 2 to 7 years. Upgrade also has no origination fee or prepayment penalties.
They provide fast access to funds with no waiting. Upgrade sends loan funds as soon as the next business day once approved.
Who Is Upgrade Best For?
Upgrade offers a streamlined loan process that works well for:
- Borrowers who want a fast loan decision
- Those with fair credit seeking better loan options
- Anyone needing a personal loan with minimal paperwork
To see offers, you’ll need a minimum credit score of 580. Upgrade makes it easy to check your potential rate.
Applying for an Upgrade Personal Loan
Here are the quick steps to apply online with Upgrade:
- Prequalify to view estimated rates in minutes without affecting your credit. No SSN needed.
- Apply by providing your SSN, income details, monthly expenses, and banking info.
- Get funds fast via direct deposit as soon as 1 business day after approval.
The quick online process and access to funds make Upgrade loans extremely convenient for meeting your borrowing needs.
What Are Low-Interest Personal Loans?
Personal loans provide an upfront lump sum of cash that gets repaid in fixed monthly installments over a set repayment term. These installment loans work well for:
- Consolidating high-interest credit card balances
- Paying medical bills
- Funding home repairs and renovations
- Financing major purchases
- Covering emergency expenses
- Paying tuition
Low-interest personal loans charge APRs well below average rates. While the average personal loan rate is currently 10.50%, lenders in this post offer rates starting as low as 5.99%.
With a low-interest loan, more of your payment goes toward the principal. You pay less interest over the loan repayment period.
Personal loans also have predictable fixed monthly payments. Your interest rate and payment amount won’t change over the full term like they can with credit cards.
Below we’ll highlight the benefits of low-interest personal loans and walk through what affects your interest rate.
Benefits of Low-Interest Rate Personal Loans
Taking out a low-interest personal loan provides several advantages:
1. Pay less interest
Low-interest loans charge you less in interest fees over the full repayment period. A lower APR means more of your monthly payment goes toward repaying the principal loan balance.
2. Fixed payments
Personal loans offer predictable payments that fit into your monthly budget. Your payment and APR stay the same until the loan is paid off.
3. Use funds for anything
Unlike auto or mortgage loans, personal loans don’t restrict how you can use the money. Low-rate personal loans provide financing for nearly any need.
4. Consolidate high-rate debts
With rates potentially under 10%, low-interest personal loans allow you to consolidate credit cards and other debts charging over 20% interest into one lower monthly payment.
5. Establish payment history
Making on-time installments builds your credit history. Low-interest loans help you do so affordably.
6. Shorter repayment terms
Many personal lenders offer repayment terms from 1 to 7 years. Shorter terms let you pay off the balance faster than alternatives like credit cards.
7. Available with fair credit
While great credit scores get the lowest rates, you can still find loan offers under 20% APR with fair credit in the low 600s. Personal loans are available to more borrowers.
A low-interest loan consolidates bills into one payment, lets you pay off the balance faster, and charges less interest. Next we’ll look at what determines your personal loan rate.
What Affects Your Personal Loan Interest Rate?
Personal loan rates range anywhere from around 6% up to 36% APR. The interest rate you’re offered depends on these key factors:
Your Credit Score
Lenders view borrowers with higher credit scores as less risky. If you have a strong credit score, you are more likely to qualify for a low-interest personal loan. Interest rates go up as your score goes down.
Your Income
Lenders want to see you have enough income to manage the new loan payment. Stable and higher income improves your rate offer.
Your Current Debt Burden
Your debt-to-income ratio compares your monthly debts to your income. The lower your DTI, the more likely lenders will approve you for their best rates.
Loan Amount
In general, the more you want to borrow, the higher your interest rate will be. Average rates tend to be lower when borrowing $15,000 vs. $40,000.
Loan Term Length
Shorter repayment terms often have lower rates. A 3-year personal loan may have a lower rate than a 5-year loan.
Lender
Each lender has its own qualifications for setting rates. Checking with multiple lenders helps you find the lowest rate you qualify for.
Your creditworthiness is the most important criteria. To get a low rate, excellent credit (scores above 720) is ideal. But even with fair credit, you can qualify for rates under 20%.
Comparing estimated rates from multiple lenders without affecting your credit is the best way to find affordable financing.
How Can I Get the Lowest Rate on a Personal Loan?
Whether you want to consolidate debt or fund a large expense, here are some tips to help you secure the lowest rate:
Check your credit – Request a free copy of your credit report and check your scores. Knowing your credit standing helps you pick lenders you may qualify with.
Compare estimated rates – Use prequalification tools to view loan offers. Compare quotes from multiple lenders to find the lowest rate for your situation.
Choose shorter terms – You’ll usually get offered a lower rate if you select a shorter 2 to 3 year repayment term rather than 5+ years.
Lower your debt – Pay down balances or consolidate debts before applying. Having less current monthly debt improves your DTI ratio.
Ask about discounts – Many lenders offer interest rate discounts for autopay, existing customers, or co-signers. Inquire about ways to lower your rate.
Apply with a cosigner – Adding a cosigner with great credit can help you qualify for more affordable rates.
Provide all requested documents – Submitting paystubs, bank statements, tax returns or other items the lender requests helps show you can repay.
With some preparation and shopping around, you can increase your chances of landing the lowest rate. Getting preapproved lets you compare personal loan offers.
Alternatives to Low-Interest Loans
Besides personal loans, consumers looking for affordable financing may want to consider:
401(k) Loans – You can borrow from your 401(k) balance, paying yourself back interest. This avoids credit checks or rates. However, it limits contributions and you lose matches.
Cash-out mortgage refinancing – A cash-out refi replaces your mortgage with a new, bigger one to tap home equity. Rates are low and you keep your house, but closing costs and the risk of foreclosure are high.
Credit card balance transfers – Moving high-rate balances to a card charging 0% APR for 12-18 months avoids interest temporarily. Pay the full amount due each month and watch for transaction fees.
Buy now, pay later financing – Services like Affirm let you spread out payments on purchases interest-free. But late fees apply and not all retailers accept it.
Borrowing from family/friends – Borrowing from people you know avoids credit checks and interest, but can damage relationships if expectations aren’t set. Draw up a contract.
Personal loans provide affordable predictable payments for your borrowing needs. Weigh the pros and cons of low-interest loans against other financing options.
Alternatives for Bad Credit Borrowers
Consumers with bad credit scores below 580 will have a hard time qualifying for personal loans. Without sufficient credit history, these alternatives may provide needed financing:
Secured credit cards – These cards require a cash deposit that acts as your credit limit. Use the card to rebuild credit, then get your deposit back after graduating to an unsecured card.
Credit-builder loans – Some credit unions offer loans to help build credit. Make monthly payments, then get the total loan amount back at the end. Interest rates are low.
Paycheck advance apps – Apps like Earnin and Dave provide paycheck advances to access money you’ve already earned. There are monthly fees instead of interest, and tips are encouraged.
Pawn shops – Offer an item as collateral to get a pawn shop loan quickly. You’ll get the item back once the loan is paid off. However, pawn shops charge very high fees and you risk losing collateral.
Peer-to-peer lending – Sites like Upstart approve more applicants by considering factors beyond a credit score. Rates may be high, but can help you access funds.
With poor credit, it can still be possible to find alternative financing. Building a credit history over time allows you to eventually qualify for affordable personal loan rates.
What Rate Can You Expect for Low-Interest Loans?
Personal loan rates largely depend on your credit score. Here are examples of average low rates currently available to borrowers*:
| Credit Score | Average Low Rate |
| 750-850 (Excellent) | 5.99% to 8.99% APR |
| 700-749 (Good) | 15.95% to 18.99% APR |
| 650-699 (Fair) | 17.95% to 22.99% APR |
| 600-649 (Poor) | 22.98% APR and above |
Based on lowest published APR ranges for $10,000 3-year personal loan in 2024. Your actual rate depends on your full credit profile and other qualifications.
Even with poor credit in the low 600’s, personal loan rates from top online lenders may beat options like credit cards. But excellent credit in the 700’s or above is needed to qualify for the best rates under 10%.
Improving your credit score can dramatically reduce interest costs. For example, boosting your credit from fair to good could mean rates as low as 15% vs. 20% APR, saving substantially over a multi-year loan.
Do Low-Interest Personal Loans Affect Your Credit?
Taking out a new personal loan can impact your credit in a few ways:
Credit checks – Most lenders will perform a hard inquiry when you apply for a personal loan. Too many hard inquiries in a short period may negatively affect your credit scores.
Lower utilization – The loan provides new credit which lowers your overall credit utilization ratio. Having a lower utilization percentage boosts credit scores.
Account mix – A new installment loan adds to your mix of credit types in your history. Varied accounts improve your scores.
Payment history – Making consistent on-time personal loan payments every month builds positive payment history. Missed or late payments hurt.
A new low-interest loan improves credit through on-time payments and lowered utilization. Just limit hard inquiries by only applying with lenders you intend to accept an offer from.
Tips for Getting a Low Rate Personal Loan
Here are some important steps you can take to get the lowest rate when you apply for a personal loan:
- Check your credit score so you know the rate range you may qualify for before applying. Reports are free weekly on Credit.com.
- Shop and compare loan offers from multiple top lenders. Prequalifying lets you check rates without hurting your credit.
- Compare total costs, not just interest rates. Check for fees and charges that raise the total borrowing expense.
- Choose shorter repayment terms if you can afford higher monthly payments, as this typically lowers interest rates.
- Pay down existing debts and loans before applying to improve your DTI for better rate offers.
- Apply with a cosigner who has excellent credit to potentially improve the rate you’re offered.
- Ask lenders about discounts that may be available to lower your APR.
- Review all terms before accepting a loan offer so you understand the loan length, fees, and fine print.
With some preparation and research, you can find affordable low-interest personal loans that fit your budget, even if your credit isn’t perfect.
What Credit Score is Needed for a Personal Loan?
Minimum credit scores vary by lender. Some lenders simply won’t approve borrowers with credit scores below a certain threshold.
These are typical minimum credit scores required:
- Online lenders: 600 to 640
- Credit unions: 650+
- Banks: 660 to 700+
Applicants with very poor credit below 580 will have difficulty getting approved with major lenders or at reasonable rates. Minimum scores range from 580 to 640 for lenders who offer bad credit loans.
While great credit opens up the most options, it’s still possible to get personal loans with fair credit. Shopping lenders and having other strong qualifications improves your chances.
READ ALSO: Types of Personal Loans and Their Uses
Can I Get a Personal Loan with Bad Credit?
Bad credit borrowers with scores below 630 will have fewer low-interest personal loan offers. However, you can still get approved for a higher rate loan in most cases.
Online lenders and credit unions may offer personal loans to applicants with scores as low as 550 to 600. These lenders look at your full credit profile, not just your scores.
With poor credit, avoid payday and title loans that charge exorbitant rates and put your financial health at greater risk. Compare all financing options.
If you have bad credit, here are some tips to qualify for a personal loan:
- Apply with a creditworthy cosigner
- Shop specialized lenders that offer bad credit loans
- Consider a secured loan using collateral
- Choose the shortest term you can afford
- Only borrow what you need
Building your credit score over time will open up lower rate loan options in the future.
How Fast Can I Get Loan Funds?
After getting approved for a personal loan, most lenders provide access to funds quickly. Here’s an overview of typical funding speeds:
- Next business day: Many online lenders like LightStream, Best Egg, and Upgrade send loan funds via direct deposit as soon as the next business day after approval.
- Within 3 days: Prominent banks and credit unions like Wells Fargo and Navy Federal often provide access to approved loan proceeds within 1 to 3 business days.
- Within a week: Some brick-and-mortar institutions may take up to 5 to 7 business days to disburse personal loan funds, whether for processing or sending a paper check.
The fastest funding comes from applying and getting approved with an online lender. After approval, ensure your chosen lender has the correct account information so funds get sent to the right place.
Ask lenders about their precise timeframes so you know when to expect the money. Getting funds quickly is
What Do Lenders Look For in Personal Loan Applications?
When reviewing applications for personal loans, lenders analyze several aspects of the borrower’s finances to assess creditworthiness and repayment ability.
Key factors lenders evaluate include:
Credit history and scores – Your history of managing credit, paying bills on time, and credit scores are some of the most important qualifications. Many lenders have minimum score requirements.
Debt-to-income ratio – Lenders look at your monthly income compared to existing debts. A lower DTI ratio (or higher disposable income) improves your approval chances and can mean better rates.
Income level – Most lenders want to see stable income. Some may ask for pay stubs, tax returns, or other documentation to verify income amounts.
Employment – Your current job and length of employment may be checked. Self-employed applicants may need to provide business tax returns.
Collateral – For secured loans, the value and equity of assets pledged for collateral are assessed. Equity improves chances of approval.
Other obligations – Lenders review your full financial picture including housing expenses, outstanding loans, alimony, child support, and other obligations that impact how much disposable income you have.
Assets – Some lenders may want to see that you have assets and savings in case of hardship. However, they mainly focus on your income streams.
Meeting a lender’s qualification criteria is essential for approval. Having a strong credit profile and sufficient income are key to getting approved and securing better rates.
Do all Personal Loans Require a Credit Check?
Most lenders conduct a hard credit inquiry when you apply for a personal loan. This shows up on your credit report and may temporarily lower your credit scores.
However, some lenders offer prequalification checks or soft pulls that let you view potential offers without a hard inquiry. Prequalifying doesn’t affect your credit score.
A few types of personal loans available without a hard credit check:
- Secured personal loans – These require collateral, so lenders focus less on your credit.
- Paycheck advance apps – Apps like Earnin lend based on proof of consistent paychecks.
- Pawn shop loans – You provide collateral in exchange for a loan, so no credit check needed. However, fees are extremely high.
- Peer-to-peer loans – Sites like Upstart may use alternative data beyond a credit score to make decisions.
- Borrowing from family/friends – No credit check is involved but can damage relationships if not repaid.
Unless you have collateral or can get funds from people close to you, most personal loans will involve some type of credit check. But shopping lenders won’t pile up hard inquiries as long as they occur in a short window of time.
How Often Can You Apply for a Personal Loan?
You can apply for personal loans as often as needed. However, each loan application triggers a hard inquiry on your credit report.
Too many hard inquiries in a short period are seen negatively by lenders and may lower your credit score temporarily.
Here are a few best practices when applying frequently for personal loans:
- Limit applications to a 14-day period – The major credit bureaus count multiple inquiries in a 2 week span as a single hard inquiry, minimizing the impact on your score.
- Prequalify instead of applying – Prequalification or soft credit checks let you shop rates with minimal (if any) impact on your credit report.
- Allow time between applications – Let at least 3 to 6 months pass before applying for another personal loan. This allows current inquiries time to fall off your report.
- Create space between loan terms – Ensure you apply for your next loan after your latest one has been fully paid off and closed.
- Avoid high-risk lender types – Applying for payday loans, car title loans, or pawn shop financing causes hard pulls and indicates risk.
Spreading out applications and comparing rates lets you find affordable financing while protecting your credit standing for any future needs.
How Many Personal Loans Can You Have at Once?
There’s no specific limit on the number of personal loans you can have out at the same time. However, lenders usually avoid approving borrowers who appear overextended.
Having multiple personal loans and other debts makes it harder to qualify for affordable rates. Your debt-to-income ratio goes up as you add obligations, signaling higher risk.
While there’s no universal maximum, aim to limit yourself to 1 or 2 personal loans at once. Other considerations include:
- Total monthly payments – Additional loans mean larger monthly bills. Make sure you have enough income to cover all payments comfortably.
- Payoff timeline – Don’t take out another loan until current balances are close to being paid in full. Prioritize paying off existing debts first.
- Credit standing – Too many new accounts and inquiries from multiple loan applications will drag down your credit, impacting rates.
- Collateral – Secured loans using the same collateral mean you can’t leverage those assets again.
Unless you have a very high income, lenders become much more reluctant to approve borrowers who already have several outstanding personal loans or high debt burdens.
Can You Get a Personal Loan and a Mortgage at the Same Time?
It is possible to get approved for a personal loan while also having a mortgage, but getting a new loan may be challenging while in the process of buying a home.
Lenders generally avoid lending to borrowers taking on multiple new significant debts at the same time. A new personal loan before closing on a mortgage makes lenders view you as higher risk.
You have a few options to receive personal loan funds when buying a home:
- Apply after closing – Wait until after you’ve purchased the home and financed the mortgage before applying for a personal loan. This is less risky.
- Use a lower amount – Apply for a smaller personal loan that requires minimal income to be set aside for payments. Or use savings to pay it off quickly after closing.
- Use home equity – A home equity loan or line of credit can provide funds using your home’s equity as collateral. Rates are often lower than personal loans.
- Ask your mortgage lender – Some mortgage issuers offer specialty mortgage and personal loan combination products.
Ideally, avoid taking out an unsecured personal loan until your mortgage closing is fully complete. Home lenders want to limit risk.
Can a Personal Loan Hurt My Credit Score?
Personal loans can have mixed impacts on your credit score. On the positive side, they can improve scores by adding credit variety and on-time payment history.
However, personal loans may hurt your scores in these cases:
- Missed payments – If you frequently pay late, your credit scores will suffer. Payment history is a major factor in FICO and VantageScore models.
- Credit inquiries – Too many hard inquiries from applying for multiple loans in a short timeframe may ding your credit temporarily.
- Lowering account age – The new loan lowers your average account age, which can slightly hurt credit ratings.
- High balances – Keeping balances on personal loans or credit cards too high hurts your credit utilization rate.
As long as you make payments on time and keep account balances low, a new personal loan shouldn’t damage your credit permanently. Limit hard credit checks from loan shopping as well.
Do All Personal Loans Report to Credit Bureaus?
Most personal loans report your payment history to the major consumer credit bureaus (Equifax, Experian, and TransUnion). This includes installment loans from banks, credit unions, and online lenders.
However, some personal lending options don’t automatically show up on credit reports:
- Pawn shop loans – Reporting depends on the shop. Many don’t report payments unless you default.
- Payday loans – These short-term loans often only report missed payments to bureaus. On-time payments may not get reported.
- Peer-to-peer and private loans – Alternative loans through platforms like Prosper may not report unless a default occurs.
- Loans from individuals – Personal loans from family/friends typically don’t report unless you fail to repay.
Making consistent on-time payments only improves scores if your loan gets reported to the credit bureaus. With informal loans, you don’t get credit for positive payment history.
How Long Do Personal Loans Take to Improve Your Credit?
If your personal loan reports your payment history, you may see some credit score improvement after just a few months of consistent on-time payments.
However, it takes longer for the full benefits to unfold:
- 1-3 months: Initial payment history gets recorded on your credit reports if reported.
- 6 months: Enough history to demonstrate you can manage this new debt responsibly.
- 12-18 months: Long enough history for this new account to improve your credit utilization rates and age of accounts.
- 24+ months: Multiple years of on-time payments continues to build your positive payment history.
The most dramatic improvement happens once the loan has been successfully repaid in full. That shows lenders you used the financing responsibly. Give personal loans at least 18 months before seeing the full rewards.
How to Pay Off Personal Loans Early
Paying off your personal loan early saves money on interest charges. With most lenders, there are no penalties for early payoff.
Here are some tips for paying off a personal loan faster:
- Pay more than the minimum – Add extra to your payment to pay down the principal faster. Even small increases help.
- Make biweekly payments – Making half payments every other week reduces the balance faster than one monthly payment.
- Pay a lump sum – Use a tax refund, bonus, or other funds for a one-time principal reduction.
- Refinance – You may be able to refinance for a shorter term to ramp up monthly payments. Have improved credit first.
- Use a debt payoff calculator – Input your balance, rate and extra payment amount to see the payoff timeline accelerate.
Paying just $50 or $100 extra each month can shave months or years off a 5+ year personal loan. Review your amortization schedule and consider refinancing options as well.
Pros and Cons of Personal Loans
Personal loans provide an easy source of financing but also come with drawbacks to consider:
Pros
- Predictable payments
- Fixed interest rates
- Large lump sums available
- Improve credit with on-time payments
- Fast access to funds
- Use for anything – bills, projects, vacations
Cons
- Rates and payments don’t change if financial situation does
- Late payments hurt credit immediately
- Prepayment penalties with some lenders
- Hard credit inquiries may temporarily lower score
- Loan denial possible even after soft pull preapproval
Compare the pros and cons before committing to ensure a personal loan aligns with your budget and goals. The predictability and easy access to financing come with responsibilities as well.
Warning Signs of a Personal Loan Scam
While most lenders are legitimate, scams do exist. Watch for these red flags:
- Guaranteed approval – No lender can guarantee approval without checking your finances.
- Upfront fees – It’s illegal to charge upfront fees before formally approving the loan.
- Calls for bank account information – Don’t give this info until completing the application and getting approved.
- Request for prepaid cards – Scammers may try to gain prepaid card access and drain the funds.
- Unsolicited offers – Offers that come without you initiating contact could be scams.
- Fake customer support numbers – Scammers create fake customer support contacts.
- Claims of no credit check – It’s a myth you can get a loan without a credit check.
Always verify a lender is legitimate through research and reviews before providing personal information or sending money.
Alternatives to Personal Loans
Personal loans aren’t the only financing option. Some alternatives to consider are:
Home Equity Loan – This type of loan uses the equity in your home as collateral for affordable rates and large lump sums. However, you risk losing your home if you can’t repay.
401(k) Loan – Borrowing against your workplace retirement plan avoids credit checks. However, it reduces your investment returns and limits contributions until repaid.
Cash-out Refinance – With a mortgage refinance, you can take out a larger loan than your remaining mortgage balance and get the difference in cash. Closing costs are high, though.
Buy Now, Pay Later Apps – Apps like Affirm and Afterpay let you split purchases into interest-free installments. But retailer and lender options are limited.
Business Line of Credit – Lines of credit provide revolving access to funds when you need them. Rates are variable, however, so they may increase over time.
Credit Cards – 0% balance transfer cards offer 0% APR for 12-15 months on transferred balances. But rates spike after the intro period.
Compare all financing options before deciding which works best for your financial situation and goals.
To Recap
Low-interest personal loans offer affordable predictable payments for debt consolidation, home projects, medical bills, and major expenses. While rates vary by lender, top online lenders like LendingClub, Lightstream, and SoFi offer rates starting under 10% to borrowers with good credit.
Even applicants with fair credit may qualify for rates under 20% with lenders like Upgrade and Upstart. Taking the time to check prequalification offers without impacting your score makes it easy to compare quotes from multiple lenders.
Setting a reasonable loan amount, shopping for the best rates, and reviewing all terms helps ensure you secure affordable financing. Monitor new hard credit inquiries and make payments on time once approved to build your credit history. With research and preparation, low-interest personal loans provide accessible lump sums on your terms.
Frequently Asked Questions About Low-Interest Personal Loans
What credit score is needed for the lowest personal loan rates?
To qualify for the lowest personal loan rates, you typically need a credit score of at least 720 and ideally 740 or above. Borrowers with scores in the 660 to 719 range can expect relatively low rates as well, compared to those with fair credit. Excellent credit opens up the most affordable financing options.
Can I get approved for a personal loan with bad credit?
It is possible to be approved for a personal loan with bad credit, but your options are more limited. Lenders that offer bad credit personal loans typically require minimum credit scores in the 550 to 600 range. However, interest rates are higher, often ranging from 20% to 36% APR. Improving your credit before applying helps secure lower rates.
Where can I get a low-interest personal loan?
Online lenders generally offer some of the lowest rate personal loans, with top picks for low rates including SoFi, Lightstream, Upstart, and Best Egg. Banks and credit unions can also offer competitive interest rates. Compare multiple lender quotes to find the most affordable financing option.
Can I get a personal loan with no credit check?
Very few personal loans are available without any credit check at all. Most lenders will check your credit before approving a loan. However, you may be able to get a personal loan with a soft credit check that doesn’t negatively impact your credit score. Comparing prequalification offers from multiple lenders can help you find the lowest rates.
How fast can I get personal loan funds?
With online lenders, you may be able to get personal loan funds deposited as soon as the next business day after approval. Major banks and credit unions typically fund loans within 3 to 5 business days. Ensure you correctly provide account and routing numbers for the quickest access to funds.
Should I take out a personal loan to consolidate debt?
If you have high-interest credit card balances or other debts, consolidating them into a new personal loan can save you money on interest. Personal loan rates are often considerably lower than credit card rates. Just be sure you have a plan to pay off the new loan and avoid accruing new high-interest debts.
How many personal loans can you have at once?
There are no formal limits, but most experts recommend keeping it to 1 or 2 personal loans at any given time. Too many concurrent loans makes it hard to qualify for affordable rates and manage monthly payments. Avoid taking out multiple loans unless you have very strong credit and income.
Can personal loans hurt your credit?
Personal loans can potentially hurt your credit score if you make late payments, have too many hard inquiries from numerous applications, or maintain high balances. However, timely payments and keeping account balances low allows personal loans to improve your credit history and mix of credit.
