Personal Loan Rates
A personal loan is an unsecured loan you can use to do anything from paying for school to renovating a home to paying off debt. Because you do not need to provide collateral for a personal loan they’re a good option if you’re strapped for cash and don’t have much to guarantee the loan. For more information on Personal Loans, click here.
Lenders have to do a lot less paperwork when issuing an unsecured loan than, say, a mortgage loan, and the terms on a personal loan are typically from two to five years. The terms are generally shorter, from two to five years, and loan amounts are usually smaller.
Because personal loans are unsecured, lenders depend a lot on your credit score when making decisions to issue loans. If you’re approved for a loan, your credit score will also determine your interest rate on the loan — the higher your score, the lower your rate will be. When you take out a personal loan, do yourself a favor and take out only as much as you need. And make sure your credit score is as high as you can get it.
Unlike credit cards, personal loans are not revolving — they come with a fixed term and often a fixed interest rate. Shop around for the best personal loan you can find and make sure you take the total cost of the loan over its lifetime, not just the interest rate. Keep in mind, too, that sometimes a lower interest rate comes with conditions — and fees.
Interest rates for personal loans vary significantly among institutions. The average interest rates for personal loans for different credit scores, according to ValuePenguin, are:
- 720 to 850: 10.3 percent to 12.5 percent
- 680 to 719: 13.5 percent to 15.5 percent
- 640 to 679: 17.8 percent to 19.9 percent
- 300 to 639: 28.5 percent to 32.0 percent