A good interest rate depends on your credit score, the loan term, and current market rates
There is no single "good" interest rate that works for everyone. What matters is how your rate compares to what lenders are offering people with your credit profile right now. If you have excellent credit, a rate of 6% might be good. If your credit is fair, 15% might be competitive. The best way to know if a rate is good is to get quotes from at least three lenders and compare them side by side.
Interest rates change daily based on the Federal Reserve's actions and market conditions. They also vary widely by lender — two people with the same credit score can receive different offers from different banks. Before you accept any rate, you should know what range lenders are currently offering for your situation.
Key Takeaways
- Interest rates on personal loans typically range from 6% to 36%, depending on your credit score and the lender.
- Your credit score is the single biggest factor in the rate you receive — a score above 740 usually gets better rates than a score below 670.
- Comparing offers from at least three lenders takes 15 to 30 minutes and can save you hundreds of dollars over the life of the loan.
- The loan term (how long you have to repay) affects your rate — shorter terms usually have lower rates than longer ones.
- Prequalification quotes let you see rates without a hard credit inquiry, so you can shop around without damaging your credit score.
How credit score affects the rate you receive
Your credit score is the primary number lenders use to set your rate. Lenders group borrowers into tiers, and each tier gets a different rate range. A score of 740 or above typically qualifies for rates in the 6% to 12% range at major banks. A score between 670 and 739 usually sees rates between 12% and 20%. A score below 670 often faces rates of 20% to 36%.
These ranges are not fixed — they shift as market conditions change and as individual lenders adjust their risk appetite. Some online lenders specialize in lending to people with lower scores and may offer rates in the 15% to 25% range even if your score is below 650. Credit unions sometimes offer better rates to members than banks do, even with the same credit score.
If your score is lower than you expected, you can request a free credit report from annualcreditreport.com and look for errors. Disputing inaccurate information can raise your score before you apply. Waiting a few months to pay down existing debt can also improve your score and lower the rate you receive.
What lenders are currently offering across different credit tiers
Personal loan rates at major banks and online lenders currently range from roughly 6% to 36%, though the exact range depends on when you check. Banks like Wells Fargo and Chase typically offer rates starting around 7% to 8% for their best customers. Online lenders like LendingClub, Upstart, and SoFi often advertise rates starting at 6% or lower, but those rates go only to borrowers with excellent credit and stable income.
Credit unions often beat bank rates by 1% to 3% for members. If you belong to a credit union, ask what personal loan rates they currently offer before you shop elsewhere. Some credit unions will let you join based on where you work or where you live, so it is worth checking whether you have access to one.
The rates shown on a lender's website are usually the best-case scenario — the rate offered to their most creditworthy borrowers. When you get a prequalification quote, you will see a more realistic range based on your actual credit profile. That range is what you should use to compare across lenders.
How loan term length affects your interest rate
A shorter loan term usually comes with a lower interest rate, but a higher monthly payment. A longer term usually means a lower monthly payment but a higher interest rate. For example, a $10,000 loan at 12% interest might be offered at 10% for a 24-month term or 12% for a 60-month term.
The reason is simple: the longer a lender has to wait for their money back, the more risk they take on. If you stop paying, they lose more money on a five-year loan than a three-year loan. They charge a higher rate to offset that risk.
When you compare rates across lenders, make sure you are comparing the same loan term. A 10% rate on a 36-month loan is not directly comparable to a 12% rate on a 60-month loan — you need to look at the total interest paid or the monthly payment to see which is actually cheaper for your situation.
How to compare rates from multiple lenders
Start by getting prequalification quotes from at least three lenders. Prequalification is a soft inquiry that does not hurt your credit score. You provide basic information — income, employment, existing debt — and the lender shows you an estimated rate range and monthly payment. This takes 5 to 10 minutes per lender.
Write down the rate, term, monthly payment, and total interest for each quote. Make sure you are comparing the same loan amount and term across all three. If one lender offers a 36-month term and another offers 60 months, adjust the term to match before you compare rates.
Once you have narrowed it down to one or two lenders, you can move forward with a full application. That is when the lender does a hard credit inquiry, which temporarily lowers your score by a few points. Hard inquiries from multiple lenders within 14 days usually count as a single inquiry for credit scoring purposes, so shopping around in a short window does not significantly damage your score.
Factors beyond interest rate that affect the true cost
Interest rate is not the only cost of a personal loan. Some lenders charge an origination fee (usually 1% to 6% of the loan amount), a prepayment penalty (a fee if you pay off the loan early), or both. A loan with a slightly higher interest rate but no origination fee can be cheaper overall than a loan with a lower rate and a 5% origination fee.
Always ask about origination fees, prepayment penalties, and late fees before you commit. Some lenders waive origination fees for borrowers with excellent credit or for loans over a certain amount. Others charge them to everyone. A lender's website should disclose these fees, but if it does not, call and ask directly.
The annual percentage rate (APR) includes the interest rate plus fees, so comparing APRs across lenders gives you a more complete picture than comparing interest rates alone. If one lender quotes a 10% interest rate with a 3% origination fee and another quotes 11% with no fee, the APRs will be different, and that difference matters.
When a higher rate might still be the right choice
Sometimes the lowest rate is not the best option for your situation. If a lender with a slightly higher rate offers flexible payment options, no prepayment penalty, or better customer service, it might be worth paying a bit more. If you are uncertain about your income over the next few months, a lender that allows you to skip a payment without penalty might be worth a 1% or 2% rate premium.
Similarly, if you plan to pay off the loan in two years but the lowest-rate lender charges a prepayment penalty, a lender with a higher rate and no penalty could save you money. Calculate the total cost under your actual plan, not just the advertised rate.
Some people also choose a lender based on how easy it is to manage the loan online or by phone. If you prefer talking to a human being, a local credit union might be worth a slightly higher rate than an online lender with no phone support.
Frequently Asked Questions
What is the average personal loan interest rate right now?
Personal loan rates vary daily and depend on your credit score. As of early 2024, rates for borrowers with good credit (670–739) typically range from 12% to 20%, while rates for excellent credit (740+) range from 6% to 12%. Rates for fair or poor credit can exceed 25%. Check current offers from at least three lenders to see what you would actually receive.
Is a 10% interest rate good for a personal loan?
A 10% rate is good if your credit score is in the 670–739 range or if you are borrowing from a credit union. For borrowers with excellent credit (740+), 10% would be on the high side — you should see offers closer to 6% to 8%. For borrowers with fair or poor credit, 10% would be excellent. Compare it to quotes from at least two other lenders to know whether it is competitive for your situation.
Can I negotiate a personal loan interest rate?
Most banks and online lenders do not negotiate rates — they are set by algorithm based on your credit score and income. Credit unions sometimes have more flexibility, especially if you have been a member for a long time or if you agree to set up automatic payments. It never hurts to ask, but do not expect a yes. Your best strategy is to shop around and choose the lender offering the lowest rate for your profile.
Does shopping around for personal loans hurt my credit score?
Prequalification quotes (soft inquiries) do not hurt your score. Hard inquiries from multiple lenders within 14 days usually count as a single inquiry for credit scoring purposes, so shopping around in a short window causes only a small, temporary dip — usually 5 to 10 points. Your score recovers within a few months. The benefit of finding a lower rate usually outweighs the temporary impact.
What if I have bad credit — what rate should I expect?
With a credit score below 580, expect rates between 25% and 36% from mainstream lenders. Credit unions and some online lenders may offer rates in the 18% to 25% range. Before you accept a high rate, consider whether paying down existing debt or waiting a few months to improve your score might lower the rate you receive. A 3% to 5% difference in rate can save you thousands of dollars over the life of the loan.