Compare the Best Low-Interest Personal Loans
The Best Low-Interest Personal Loans
There are countless options to choose from when it comes to finding the best low-interest personal loan. To help you save time, we’ve analyzed and reviewed the top lenders in the game.
Rate Comparison Table
Interest Rate (APR) 8.99% to 25.99% What Stands Out Will beat competitor offers by 0.10% Loan Size Offered $5K to $100K Minimum Credit Score N/A Read Review |
Interest Rate (APR) 8.99% to 29.49% What Stands Out Pays off creditors directly up to $100K Loan Size Offered $5K to $100K Minimum Credit Score 680 Read Review |
Interest Rate (APR) 7.99% to 17.99% What Stands Out No origination fees Loan Size Offered $600 to $50K Minimum Credit Score 550 Learn More |
Interest Rate (APR) 7.99% to 24.99% What Stands Out Fully U.S.-based customer service Loan Size Offered $2.5K to $40K Minimum Credit Score 660 Read Review |
Interest Rate (APR) 7.80% to 35.99% What Stands Out Offers for low- or no-credit borrowers Loan Size Offered $1K to $50K Minimum Credit Score 300 Read Review |
*APR accurate as of Mar. 8, 2024
Best Uses for a Low-Interest Personal Loan
Personal loans can be used for a variety of reasons, including debt consolidation loans, wedding expenses or auto financing. When taking out a personal loan, it’s wise to have a clear reason, and avoid using it for discretionary spending that could lead to debt accumulation and financial strain, said Dr. Chris Courtney, cognitive neuroscientist and senior vice president of Happy Money, a personal loan lender.
Some popular reasons for personal loans include:
Debt consolidation: Consolidating debt was the top reason individuals in MarketWatch Guides team’s most recent personal loans survey took out a personal loan. Consolidating high-interest debt like credit cards into a lower-interest personal loan can help you save money on interest payments and reduce your debt more quickly, Courtney explained. “Importantly, Happy Money research has found that people with no credit card debt experience nearly 40% less financial stress than those with $1 or more.” He added that their data shows that people who use the majority of their loan proceeds to pay down debt are more than twice as likely to keep debt below $1,000 long term.
Car financing or repairs: About 18% of people surveyed by MarketWatch about their personal loan use told us they used a personal loan for car financing or repairs. While personal loan interest rates are usually a bit higher than auto loans since they’re unsecured, they can be a good option because they’re fast to apply for and you may qualify for longer terms than with a car loan. A personal loan is a solid way to finance if you’re buying a car from a private seller and need to finance it.
Home improvements: The second-most popular reason for taking out a personal loan on our survey was home improvements or renovations. While many people use a home equity loan or line of credit to finance home improvements, these secured loans take time to process and often have origination fees. Personal loans, with their fast approval processes and quick funding, allow homeowners to start their home improvement projects quickly.
Although low-interest personal loans can save you money, it’s wise to chat with a financial adviser or credit counselor first to make sure a loan is the best option for you.
How to Qualify for a Lender’s Best Rates
Without a doubt, your best bet to qualify for a lender’s best rates is to get your credit score as high as you can.
Ways you can improve your score include paying bills on time, reducing existing debt balances, and resolving any errors on your credit report, said Leslie Tayne, financial attorney and founder of Tayne Law Group. Because your payment history accounts for 35% of your FICO calculation, it’s imperative to make on-time payments every month to pay down your loans.
Tayne also recommended applying with a cosigner if the lender offers this option. “However,” she cautioned, “Be sure the co-signer is aware of their legal responsibilities and comfortable with the risks.” While a cosigner can improve your chances of getting approved or help you get a lower rate, their credit will suffer if you miss a payment.
Another way you can qualify for lower rates is to consider your repayment term. The shorter your term, the lower your rate will typically be.
Finally, consider rate discounts. Some lenders offer 0.25% to 0.50% discounts for autopay or sending payments directly to a debtor.
Calculate Your Personal Loan Payments
Before you apply for a loan, use our personal loan calculator to see whether a personal loan is likely to fit in your monthly budget. The calculator is also a great way to see how different interest rates and terms affect your monthly payments.
If you’re not sure which interest rate to pick, you can use the national average personal loan rate – which was 12.35% in November, according to the latest data from the Federal Reserve. Keep in mind, though, that the interest rate you’ll be offered can vary based on your credit score and existing debt.
PrincipalInterest
Total Principal Paid$10,000
Total Interest Paid$2,166
Total Paid$12,166
Show amortization schedule
Key Considerations Besides Rates When Choosing a Lender
While rates are certainly important when comparing lenders, they’re not the only items to pay attention to. You’ll also want to check if the lender offers flexible repayment options, like monthly or biweekly payments or the option to adjust your due date to better fit your budget. Also, consider customer support — you’ll want a lender that’s easy to reach when you have questions. And stay away from origination fees if you can. They’re deducted directly from the amount you’re borrowing, meaning less money in your pocket.
Here’s what to consider in addition to a lender’s APR:
- Watch out for hidden fees, such as origination or prepayment penalties. Most of our recommended lenders don’t have origination fees and none of our recommended lenders charge prepayment penalties.
- Check the loan term: Longer terms can mean lower monthly payments but higher overall costs.
- Look for flexible repayment options that match your budget. Lenders on this list have repayment terms from one to seven years (and up to 12 years for home renovation loans).
- Read online reviews or ask friends for recommendations to gauge customer service.
- Talk to a few lenders to see who you feel most comfortable with — they should be transparent and helpful in answering your questions.
Don’t rush. Take your time to find the best low-interest personal loan for your needs.
The Bottom Line
Exploring the best low-interest personal loan options can be a game-changer for your finances. It means paying less in interest, which can save you money in the long run. If you’re considering getting a personal loan, take a moment to explore the top lenders on this list. Responsible borrowing is key to reaching your financial goals, and with these cost-effective loans, you’re one step closer to achieving them.
Frequently Asked Questions About Low-Interest Personal Loans
Improving your credit score is the first step to getting the lowest interest rate on a personal loan. You can do this by paying all of your bills on time and reducing your total debt amount. Also request a free credit report from Experian, TransUnion and Equifax (you get one free report each year) to make sure there are no errors on your credit history. You can also get lower rates if you choose a loan with a shorter repayment term. If you add a cosigner with better credit than you to your loan application, you may be able to get a lower rate.
Getting a 0% interest personal loan is extremely rare and typically reserved for promotional offers from specific lenders. These offers are usually limited to borrowers with excellent credit scores and may come with strict terms and conditions, such as a short repayment period or limited loan amount. So while it’s technically possible, it’s not very probable.
The average APR for a 24-month personal loan is currently 12.35%, according to the most recent Federal Reserve data. Anything below this average would be considered a good APR on a personal loan. Rates will vary based on your credit score, financial stability, the lender you choose and your loan terms, but currently, our recommended lenders are offering rates from 6.4% to 35.99% APR.
Payday loans and similar high-interest loans may be easier to get but often come with steep fees and interest rates that make them predatory in nature. Instead of taking on a risky loan, work on improving your chances of getting approved for a more affordable personal loan. This could include working on building a good credit history, stabilizing your income and getting a co-signer if needed.
Methodology: Our System for Ranking the Best Low-Interest Personal Loans
Our team put together a comprehensive 100-point rating system to evaluate personal loan companies. We gathered data points from 28 of the most prominent lenders in the US and analyzed disclosures, licensing documents, sample loan agreements, marketing materials and websites. Our rating system takes into account four broad categories.
- Affordability (35%): How expensive each company’s loans are to pay back.
- Loan features (35%): The breadth of loan terms and features available to prospective customers.
- Customer experience (20%): Ease of application, prequalification and customer service interactions.
- Company reputation (10%): An exploration of lenders’ Better Business Bureau files, customer reviews and outstanding regulatory actions.
Our top-rated lenders may not be the best fit for all borrowers. To learn more, read our full personal loans methodology.
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