The interest rate you’ll receive can depend on the lender and your creditworthiness. Rates offered by lenders through the LendingTree personal loan marketplace range from 5.99% to 35.99%, but many lenders charge rates several times that high — especially lenders that work with borrowers who have poor credit. That’s one of the reasons it’s so important to shop and compare loan offers first.
Having a higher credit score can certainly pay off, as a lower interest rate may be able to save you a lot of money over the lifetime of the loan. For example, someone with a FICO score over 760 who borrows $10,000 with a four-year term might pay $1,759 in interest. By contrast, someone with a score of 580 to 639 might pay $7,288 in interest, a $5,529 difference.
Whether you have poor or excellent credit (or something in between), comparing lenders could help you find the lowest possible interest rate for your loan. Since lenders consider factors differently, the lender with the lowest advertised rate on its website might not be the one that offers you your lowest rate.
In fact, a LendingTree study found that even those with excellent credit may be offered a wide range of APRs on personal loans — from 7.55% APR to 16.38% APR for a $10,328 three-year loan. In this case, shopping around and finding that low-rate loan could save the borrower over $1,500 in interest.
Shopping for a personal loan and comparing your rates and terms may be even more important for those with lower credit scores. Applicants with good credit had a larger APR range than those with excellent credit, and those with fair credit who don’t shop around wound up paying more for additional costs. For example, some lenders may charge higher origination fees to borrowers with poor credit, while others won’t charge an origination fee to any borrower.