Personal loan

5-year fixed personal loan rates fall again by more than half a percent

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The latest interest rate trends for personal loans from the Credible Marketplace, updated weekly. (iStock)

Borrowers with good credit seeking personal loans in the past seven days have prequalified for lower rates for 5-year fixed-rate loans and higher rates for 3-year fixed-rate loans compared to the previous seven days .

For borrowers with credit scores of 720 or higher who used the Credible Marketplace to select a lender between January 10 and January 16:

  • Rates on 3-year fixed-rate loans averaged 11.45%, down from 11.07% the previous seven days and from 10.92% a year ago.
  • Rates on 5-year fixed-rate loans averaged 12.98%, down from 13.65% the previous seven days and 14.38% a year ago.

Personal loans have become a popular way to consolidate and pay off credit card debt and other loans. They can also be used to cover unexpected expenses such as medical bills, pay for a major purchase, or fund home improvement projects.

Rates on a 5-year loan fell by more than half a percentage point, the second time in January that they fell so significantly. Overall, personal loan rates have continued their downward trend since the start of 2022, despite daily fluctuations. Borrowers can enjoy significant interest savings over the term of their loan with a 3 or 5 year fixed rate personal loan now.

Whether a personal loan is right for you often depends on several factors, including the rate you may qualify for. Comparing several lenders and their rates could help you get the best possible personal loan for your needs.

It’s always a good idea to shop around on sites like Credible to understand how much you qualify for and choose the best option for you.

Here are the latest personal loan interest rate trends from the Credible Marketplace, updated weekly.

Personal Loan Weekly Rate Trends

The table above shows the average prequalified rates for borrowers with credit scores of 720 or higher who used the Credible Marketplace to select a lender.

For the month of December 2021:

  • 3-year personal loan rates averaged 11.29%, down from 11.32% in November.
  • 5-year personal loan rates averaged 14.12%, down from 14.25% in November.

Personal loan rates vary widely depending on credit rating and length of loan. If you’re curious about what kind of personal loan rates you might qualify for, you can use an online tool like Credible to compare options from different private lenders. Checking your rates will not affect your credit score.

In December, the average prequalified rate retained by borrowers was:

  • 8.92% for borrowers with a credit score of 780 or higher choosing a 3-year loan
  • 29.04% for borrowers with a credit score below 600 who choose a 5-year loan

All Credible Marketplace lenders offer fixed rate loans at competitive rates. Since lenders use different methods to assess borrowers, it’s a good idea to ask for personal loan rates from multiple lenders so you can compare your options.

Current personal loan rates by credit score

Depending on factors such as your credit score, the type of personal loan you are looking for, and the repayment term of the loan, the interest rate may differ.

As the chart above shows, a good credit rating can mean a lower interest rate, and rates tend to be higher on loans with fixed interest rates and longer repayment terms.

How to get a lower interest rate

Many factors influence the interest rate a lender can offer you for a personal loan. But there are steps you can take to increase your chances of getting a lower interest rate. Here are some tactics to try.

Increase credit score

Generally, people with higher credit scores qualify for lower interest rates. Steps that can help improve your credit score over time include:

  • Pay your bills on time. Payment history is the most important factor in your credit score. Pay all your bills on time for the amount owed.
  • Check your credit report. Check your credit file to make sure there are no errors. If you find any errors, dispute them with the credit bureau.
  • Reduce your credit utilization rate. Paying off credit card debt can improve this important credit score factor.
  • Avoid opening new credit accounts. Apply for and open only the credit accounts you really need. Too many serious inquiries on your credit report in a short time could lower your credit score.

Choose a shorter loan term

Repayment terms for personal loans can vary from one to several years. Typically, shorter terms come with lower interest rates because the lender’s money is at risk for a shorter period.

If your financial situation allows it, applying for a shorter term could help you get a lower interest rate. Keep in mind that the shorter term doesn‘t just benefit the lender: by choosing a shorter repayment term, you’ll pay less interest over the life of the loan.

Get a co-signer

You may be familiar with the concept of a co-signer if you have student loans. If your credit isn’t good enough to qualify for the best interest rates on personal loans, finding a co-signer with good credit could help you get a lower interest rate.

Remember that if you are unable to repay the loan, your co-signer will have to repay it. And co-signing a loan could also affect their credit score.

Compare rates from different lenders

Before applying for a personal loan, it’s a good idea to shop around and compare offers from several different lenders to get the lowest rates. Online lenders generally offer the most competitive rates and can be quicker to disburse your loan than a physical establishment.

But don’t worry, comparing rates and terms doesn’t have to be a tedious process.

Credible is easy. Simply enter the amount you want to borrow and you can compare multiple lenders to choose the best one for you.

About Credible

Credible is a multi-lender marketplace that allows consumers to discover the financial products best suited to their particular situation. Credible’s integrations with major lenders and credit bureaus allow consumers to quickly compare accurate and personalized loan options without putting their personal information at risk or affecting their credit score. The Credible Marketplace offers an unparalleled customer experience, as evidenced by over 4,500 positive reviews on Trustpilot and a TrustScore of 4.7/5.