September 27, 2021 – Rate cut – Forbes Advisor
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Personal loan rates fell last week. As long as you are a qualified borrower, you benefit from a decently low interest rate. For many, that means financing for a major purchase or project is just around the corner.
From September 20 to September 24, the average fixed interest rate on a three-year personal loan was 10.70% for borrowers with a credit score of 720 or higher who prequalified in the personal loan market of Credible.com. That’s down 0.44% from the previous week, according to Credible.com. The average five-year personal loan rate fell last week from 14.88% to 14.35%.
The most qualified borrowers generally benefit from the best rates. In fact, qualified borrowers can benefit from a much lower than average rate. The rate you receive depends on several factors, including your creditworthiness and the loans available from the lender you choose.
Related: Best personal loans 2021
Get the best rates
Two quick ways to help you qualify for lower rates include paying off existing debt to help lower your DTI and improve your credit score. Personal loan interest rates are based on a number of factors including your overall creditworthiness, credit rating, income, and debt-to-income ratio (DTI).
Although the qualification requirements differ from lender to lender, a minimum credit score of 720 will usually give you the best deal. If your score drops below this marker and you are looking for the lowest possible rate, there are steps you can take to improve your score. Try strategies like lowering your credit usage rate, removing errors from your credit report, and paying your bills early or on time.
Calculate monthly payments for a personal loan
You can estimate your monthly payment and how much you will pay in interest once you know the interest rate, duration and amount of your personal loan.
Let’s say you get a three-year, $ 5,000 personal loan at a fixed rate of 10.70%. You would pay around $ 163 per month and around $ 867 in interest over the life of the loan, according to the Forbes Advisor personal loan calculator. You would pay $ 5,867 in total over those three years, which includes both principal and interest.
Average interest rates for personal loans by credit score
The rates below are estimated average interest rates for personal loans based on VantageScore risk levels, according to Experian. While the rates below can serve as a general guideline, note that interest rates are ultimately set and determined by lenders.