Personal loans are available from banks, credit unions and online lenders. Although you can likely find lenders locally, exploring lenders online can help you find more flexible terms and potentially lower interest rates. Further, prequalification can reveal the lenders you may qualify for as well as the terms you could get – all without dinging your credit.
Comparison shopping is key to getting your lowest rates on loans. Consider the below data, which reveals average offered APRs to borrowers within four credit bands. For each band, we also show the average APR offered to the top 10% of borrowers.
|Personal loans: Average best offered APRs
||Average APR (overall)
||Average APR (top 10% of borrowers)
|Souce: LendingTree Personal Loan Offers Report, May 2020
What affects your personal loan rates
Lenders set personal loan rates based on a borrower’s likelihood of repayment. Since the loans aren’t secured, the lender cannot reclaim property if you fail to repay the loan. When a lender thinks you’re likely to repay a loan, it’ll offer a lower rate on the loan.
To understand how a bank views your financial history, it is important to focus on two numbers:
- Your credit score is a three-digit number that represents your creditworthiness to a bank. You can see your credit score through My LendingTree, a free credit-monitoring service.
- Your debt-to-income (DTI) ratio compares your monthly debt obligations to your gross monthly income. The lower your DTI, the more likely it is that you can comfortably take on a new debt.
Prequalify with up to five lenders today
Loan marketplaces like LendingTree can make it easy to find and compare offers from multiple lenders after you fill out one online form.
After providing basic personal information and on your loan needs, you’ll prequalify with up to five lenders within a few minutes. Compare your loan offers to help you find the lowest refinance rates available to you. If there’s a loan offer you’d like to pursue, you can move forward with a formal application, which will require a hard credit check. Prequalified offers are not loan guarantees because the lender must verify your eligibility.