Personal loan rates fell last week. This means if you’re looking to finance a home remodeling project, vehicle, unexpected bills or temporarily need to improve your cash flow, you can still snag a reasonable rate, as long as you’re a high-qualified applicant.
From July 12 to July 16, the average fixed interest rate on a three-year personal loan was 10.97% for borrowers with a credit score of 720 or higher who prequalified on Credible.com’s personal loan marketplace. That’s down 0.38% from the previous week, according to Credible.com. Average rates on five-year personal loans also fell last week from 13.67% to 13.63%.
However, the actual rate you receive depends on your creditworthiness and what’s available through your preferred lender. Well-qualified borrowers may be able to find rates significantly lower than the average.
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How to Compare Personal Loan Rates
If you’re out to get the best rate, be sure to look for lenders who offer a personal loan prequalification process. While many lenders post their rates online, this only gives you a range of what they offer, not an exact rate based on the qualifications you meet. However, when you prequalify for a personal loan, a lender will run a soft credit check—which has no impact on your credit score—to prescreen you.
Based on this information, the lender will give you a snapshot of the terms you could qualify for, including your loan rates, term and limit. You can prequalify at multiple lenders and compare the terms to help you find the best loan for your specific situation.
However, prequalification doesn’t guarantee approval. Once you find an offer you like, you will still need to submit a formal application and provide additional documentation to the lender. When you apply, a lender will typically run a hard credit check, which will ding your credit score between one and five points.
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Calculate Your Personal Loan Payments
Once you have an idea of your personal loan interest rate, you can calculate your monthly payments. You will need to have your loan’s interest rate, limit and term. This will help you determine how much you’ll owe monthly and how much you’ll pay in interest over the life of your loan.
For example, let’s say you have a personal loan with a $5,000 loan amount, 10.97% fixed interest rate and a term of 36 months. The Forbes Advisor personal loan calculator shows your monthly payment would be $163.62 and you’d pay $890.41 in interest over the life of the loan. Overall, you would owe $5,890.41, which includes both principal and interest.
Average Personal Loan Interest Rates By Credit Score
Here are the average estimated interest rates for personal loans based on VantageScore risk tiers, according to Experian. Please note that interest rates are determined and set by lenders. The rates provided are estimations.