Personal loan

August 17, 2022 – Rates Drop Again – Forbes Advisor

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Personal loan rates fell last week, giving qualified borrowers the chance to earn a decent interest rate and finance a project, purchase or even unexpected bills.

From Aug. 8-13, the average fixed rate on a three-year personal loan was 10.65% for borrowers with a credit score of 720 or higher who prequalified on Credible.com’s personal loan marketplace. The rate was 12.98% the previous week, according to Credible.com. The average five-year personal loan rate fell 0.18% last week to 15.06% from 15.24%.

However, the actual rate you receive depends on your creditworthiness and what is available from your preferred lender. Well-qualified borrowers may be able to find rates well below average.

Related: Best Personal Loans

How to benefit from more favorable interest rates

Two quick ways to help you qualify for better rates is to pay down your existing debt to help lower your DTI and improve your credit score. Personal loan interest rates are based on a number of factors, including your overall creditworthiness, credit score, income, and debt-to-income ratio (DTI).

Although qualification requirements differ from lender to lender, a minimum credit score of 720 will generally get you the best deal. If your score falls below this marker and you’re looking for the lowest possible rate, you can take steps to improve your score. Try strategies such as reducing your credit utilization rate, removing errors from your credit report, and paying your bills early or on time.

Calculate monthly personal loan payments

To see if this fits your budget, it’s important to estimate how much you’ll pay on a monthly basis and how much you’ll pay in interest over the life of the loan. One of the easiest ways to do this is to use a personal loan calculator. You will need the rate, term and amount of your loan.

For example, suppose you have a personal loan for $5,000 with a fixed interest rate of 10.65% and a term of 36 months. The Forbes Advisor Personal Loan Calculator indicates that your monthly payment would be around $163 and you would pay around $863 in interest over the life of the loan. Overall, you owe $5,863, which includes both principal and interest.

Personal loan rate by credit score

Here are the estimated average interest rates for personal loans based on VantageScore risk levels, according to Experian. Please note that interest rates are determined and set by the lenders. The prices provided are estimates.