What Is a Good Interest Rate for a Personal Loan?
Learn what counts as a good personal loan interest rate, what affects your rate, and how to get the lowest rate possible for your situation.
Quick Answer
A good interest rate for a personal loan is anything below 10% APR. Borrowers with excellent credit (720 and above) often qualify for rates between 6% and 10%. If your credit score is in the good range (680 to 720), expect rates between 10% and 16%. Anything above 20% is a red flag, and rates above 30% should be avoided unless you have no other option.
The national average personal loan rate hovers around 11% to 12% APR for borrowers with decent credit. That number goes much higher for people with poor or thin credit histories, sometimes reaching 35% or more from certain lenders.
Your goal is simple: get the lowest APR you can qualify for. Even a 3% difference on a $10,000 loan over three years amounts to hundreds of dollars in extra interest. Small differences in rate add up fast.
What Affects Your Interest Rate
Your credit score is the single biggest factor. Lenders use it as a quick signal of how likely you are to repay. A score above 720 unlocks the best rates. Below 580, your options shrink and rates climb sharply.
Your income and debt-to-income ratio matter almost as much as your score. Lenders want to see that your existing debt payments do not already eat up most of your paycheck. If you earn $4,000 a month and already pay $1,500 in bills, a lender may offer you a higher rate or decline you entirely.
The loan amount and term also play a role. Shorter loan terms typically come with lower interest rates because the lender takes on less risk over time. Longer terms feel easier month to month, but you pay more interest in total. Finally, whether you choose a secured loan (backed by collateral) or an unsecured one changes the equation — secured loans almost always carry lower rates.
Good vs Bad Interest Rates by Credit Score
If your credit score is 750 or above, you should realistically expect offers between 6% and 11% APR. This is the tier where multiple lenders compete for your business, which gives you the power to negotiate or simply pick the best offer.
With a score between 670 and 749, rates typically fall between 11% and 20%. These are still manageable, but you want to shop around carefully and avoid the higher end of that range if possible.
Below 600, personal loan rates from traditional banks may be out of reach. Credit unions sometimes offer better deals to members with lower scores. Online lenders may approve you, but at rates between 25% and 36%. At that point, it is worth asking whether the loan is truly necessary, or whether there is a cheaper way to access cash.
How to Get a Lower Rate
The most reliable way to lower your rate is to improve your credit score before applying. Paying down credit card balances, making on-time payments for six months, and disputing any errors on your credit report can all nudge your score up meaningfully.
Shopping around is free and powerful. Getting pre-approved with multiple lenders within a 14-day window counts as a single hard inquiry on your credit report, so you can compare without damaging your score. Check traditional banks, credit unions, and reputable online lenders.
Adding a co-signer with strong credit is another option if your own score is limiting you. The co-signer takes on legal responsibility if you default, so choose someone you trust and who trusts you. Some lenders also offer rate discounts if you set up autopay, typically 0.25% to 0.5% off the quoted rate.