Average Personal Loan Rates

Vault’s Viewpoint on Average Personal Loan Rates

• The average interest rate on a personal loan ranges from 16.50% for excellent credit to 33% for bad credit.
• Your loan interest rate is largely based on your credit score—the higher your credit score, the lower your interest rate.
• Your credit score, payment history, income and DTI can all affect your ability to get a personal loan.

Average Personal Loan Rates

Personal loan interest rates vary from lender to lender. The table below breaks down some of the top loan lenders and their minimum and maximum loan annual percentage rates (APRs).

Average Personal Loan Rates for Excellent Credit

Personal loans for excellent credit (FICO score between 800 and 850) have an average starting APR of just 7.91% and an overall average of 16.50%. If you have an excellent credit score, you have the pick of some of the lowest interest rates on the market.

The lenders in the table below offer some of the lowest interest rates around for well-qualified borrowers.

Average Credit Union Personal Loan Rates

The average starting APR for credit union loans is 8.64%, while the overall average is 13.32%. Credit unions often charge some of the best interest rates on personal loans and other lending products, partially because they’re member-owned. In fact, the maximum APR credit unions can charge on personal loans is 18%.

Average Personal Loan Rates for Fair Credit

In May 2024, the average personal loan rate for fair credit is 21.04%. Because your interest rate is based on your credit score, you may not qualify for a lender’s lowest rates if you have fair credit (FICO score from 580 to 669). Here’s a look at the top lenders that offer personal loans to borrowers with fair credit.

Average Personal Loan Rates for Bad Credit

In May 2024, the average interest rate for personal loans for bad credit was 33%, but rates could reach 179% for borrowers who struggle to qualify for loans.

If you have bad credit (a FICO score below 580), you’ll have fewer options when shopping for a personal loan, but there are still lenders available. In fact, a handful of lenders specialize in serving borrowers who may struggle to get loans elsewhere. But because your interest rate is based on your credit score, a poor credit score will generally result in the highest interest rate.

Personal Loan Requirements

Each lender has eligibility requirements to qualify for a personal loan. Here’s a look at some of the common factors to watch out for.

Credit score

Your credit score is one of the most important personal loan requirements. First, most lenders have a minimum credit score to qualify for a loan. Some lenders give loans to borrowers with bad credit. But you’ll have the best chance of qualifying with good or excellent credit.

Your credit score also impacts your interest rate. Generally speaking, the better your credit score, the lower the interest rate you’ll qualify for, which will save you money on your loan.

Payment history

Lenders also look at your credit report. Most lenders want to see a positive payment history, meaning you’ve paid your bills on time for many years. If you have missed or late payments or delinquent accounts on your credit report, you may be less likely to qualify for a loan.

Income

To qualify for a personal loan, you must usually have a consistent source of income. For most people, consistent income means either employment or self-employment. But you may also qualify with alternative income sources like retirement income, alimony or certain public benefits.

Debt-to-Income Ratio

Most lenders have a maximum debt-to-income ratio (DTI) to qualify for a personal loan. Your DTI is the percentage of your gross income that you spend on debt each month. The higher your DTI, the less room you have in your budget for an additional loan payment. The lower your DTI, the more likely you are to be approved for a loan.

Collateral

Depending on your financial situation, you may not qualify for an unsecured loan. In that case, you can apply for a secured loan, which requires collateral. A handful of lenders like Best Egg offer secured personal loans. Collateral options can include your savings account, your vehicle or even the fixtures in your home.

Co-Signer

Another option, if you don’t qualify for an unsecured personal loan, is to apply with a co-signer. A co-signer agrees to take responsibility for the loan if you can’t make the payments. If your co-signer has a good credit score, it could improve your chances of being approved for the loan. Be careful, though—your co-signer could face the same negative consequences. Only ask someone to co-sign your loan if you’re confident you can pay it back.

Origination fee

Many personal loans require an origination fee, which is an upfront fee that’s often a percentage of the loan amount. The origination fee often comes out of the loan funds. For example, let’s say you get a $10,000 personal loan with an origination fee of 5%, which is $500. The fee will be withheld from your loan funds, and you’ll get $9,500. Some lenders may let you roll your origination fee into the loan, but that’s less common.