6 Low-Interest Personal Loans: Borrow Without Breaking the Bank

The average rate on a two-year personal loan was 9.38% for the year 2021, according to Federal Reserve Consumer Credit data. This is just the average personal loan rate, however — well-qualified borrowers could be eligible for much lower interest rates.

With a low-interest personal loan, you’ll be able to borrow what you need while keeping loan costs affordable. Here’s a look at where to find a low-interest personal loan, and who can qualify for one.

How to get lower personal loan rates

Understanding what goes into personal loan rates can help you make informed decisions. When you know what goes into personal loan rates and offers, you’ll be better equipped to evaluate lenders as you shop for a personal loan.

Be a well-qualified borrower

Currently, the best personal loan rates start around 4% to 6% APR. Whether lenders will offer you rates that low, however, will depend on how comfortably you meet their requirements for personal loans.

Here’s a look at the factors that most borrowers will need to have in place to qualify for low-interest personal loans.

• High credit score: Your credit score can indicate how likely it is that you’ll repay a loan. The higher your score, the more likely it is that a personal loan provider will offer you low-interest rates. Typically, the lowest rates are reserved for borrowers with a good or excellent credit score — meaning a FICO score of around 720-740 or higher.
• Positive credit history: On top of considering your credit score, a personal lender is likely to review your credit reports and borrowing history. You might have a better chance at getting lower rates if you have a longer credit history, a positive payment history, and few negative or derogatory marks on your report.
• Lower debt-to-income (DTI) ratio: This factor measures how much of your monthly income goes toward debt payments. Lenders often look at this to be sure you can reasonably afford to repay the loan you’re borrowing, and it can also play a role in how they set rates. Lower is better, with a good debt-to-income ratio sitting at or below 30%.

Choose low-interest loan terms and lenders

The personal loan rates you’ll pay are about more than just your borrower profile. The type of personal loan and lenders you choose can also affect what you can expect to pay.

Here are some choices that could net you a lower personal loan rate.

• Shorter loan terms: A shorter loan term represents a lower risk to the lender, as they’ll get their money back faster. So choosing a personal loan with a shorter term of three years or less can often result in more favorable interest rates.
• Variable interest rates: You might be offered lower initial rates if you select a variable-rate rather than a fixed-rate personal loan. The rate on this type of personal loan, however, will rise and fall with market interest rates. The lender passes some of the costs of fluctuating rates onto you as the borrower, lowering their risk — and allowing them to offer lower upfront APRs on variable rate personal loans.
• Comparison shopping: Shopping around and comparing prices is a given with most major purchases. This process can be just as effective at saving you money when applied to personal loans, as the advertised rates are just part of the story. Take time to vet personal loan providers, request rate offers generated with soft credit checks, and compare various offers.

6 lenders who offer low-interest personal loans

It can be a little overwhelming to dive right into comparing personal lenders. To help you get started in your search, we’ve highlighted a few places to start your search for a low-interest personal loan.

1. LightStream

LightStream’s personal loan rates start lower than any other lenders on this list. Fixed rates for personal loans start at 7.49% (as of Nov. 17, 2023) APR if you have autopay set up.

On top of its low rates, LightStream offers to beat any qualifying rate offer from a competitor. This online lender also claims it provides the best loan process, backing that claim with a $100 “loan experience guarantee.”

Here are some other details about LightStream personal loans:

• Option to borrow $5,000 up to $100,000
• Loan terms range from 2 to 20 years (depending on the purpose of the loan)¹
• No origination fee
• Credit requirements include yearslong credit history, good credit mix, and positive payment history with no or few negative marks
• Other financial requirements include steady and sufficient income and assets that show a pattern of saving

2. SoFi

SoFi personal loans also start interest rates low, with fixed rates ranging from 8.99%-29.99% (as of Mar. 6, 2024) APR with all discounts.² They also offer variable-rate personal loans, though the APRs for these loans aren’t published on SoFi’s site.

• Option to borrow $5,000 to $100,000
• Loan terms from 2 to 7 years
• No origination fee or late fees
• Eligibility is based on credit score, financial history, career and experience, and monthly income compared to expenses
• Applicants must be employed, have an offer of employment, or have other income to be considered

3. Upstart

Next on our list is Upstart, which offers personal loans with rates ranging from 7.80%-35.99% (as of Mar. 6, 2024). This doesn’t, however, include the personal loan origination fee that Upstart may charge, which ranges from 0-8% of the loan amount.

Upstart also considers additional factors to determine whether to approve a loan and to help set rates. It will review your education and job history alongside traditional requirements such as credit, income, and DTI.

• Option to borrow $1,000 to $50,000
• Loan terms of 3 or 5 years
• Loan requirements include a minimum FICO credit score of 620 (or 580, depending on your location), no adverse credit marks, and a personal banking account
• Applicants must have a full- or part-time job, an offer of a job, or another income source

4. Prosper

Prosper is a peer-to-peer lender that offers personal loans with fixed rates, which start at 8.99% (as of March 11, 2024). This includes a personal loan origination fee of 1%-7.99% of the loan amount, which is withheld from the amount you borrow.

• Option to borrow $2,000 to $50,000
• Loan terms of 2 to 5 years
• Lending requirements include a DTI under 50% and a credit score of 560 or higher

5. Upgrade

Upgrade is another online source for low-interest personal loans. The APRs on Upgrade personal loans range from 8.49%-35.99% (as of Oct. 17, 2023). This includes an origination fee of 1.85%-9.99%.³

• Option to borrow $1,000 to $50,000
• Loan terms of 3 or 5 years
• Loan requirements include having a bank account and an email address; credit score, credit usage, and borrowing history are considered for loan eligibility

6. Happy Money

If you’re looking for a low-interest personal loan to consolidate credit card debt, Happy Money (formerly known as Payoff) could be a smart option. The online lender offers personal loans designed for credit card consolidation, with APRs starting at 11.72% (as of Dec. 5, 2023). That APR includes an origination fee, which ranges from 0-5%.

• Option to borrow $5,000 to $35,000
• Loan terms of 2 to 5 years
• No late fees or check processing fees
• Loan requirements include a credit score of 600 or higher, a DTI of 50% or less, and a positive credit history of three years or longer, among others

Other ways to get lower personal loan rates

These lenders can be a good start to your search for a low-interest personal loan, but they aren’t the only place you can look. Here are a few other options to consider that could help you get a lower interest rate:

• Check with local credit unions and banks to see if they offer low-interest personal loans with competitive rates.
• Consider adding a cosigner with a solid credit history to your personal loan. Many lenders will set rates based on the lower credit score — which could net you a better rate.
• Improve your credit and apply once it’s better. You can put in some work to bring up your credit score, apply once it’s higher, and have a better chance at qualifying for lower personal loan rates.

Shopping for a low-interest personal loan can feel like a hassle. While you might spend a few hours researching personal loan options, remember that you’ll likely be repaying the loan for years.

It’s worth the effort to find a lower personal loan rate, which will keep borrowing costs affordable and help you avoid high-interest costs.