The median APR for personal loans has dropped to 23.39%, down 1.24 points from the previous week. However, this is just the median, and rates vary dramatically depending on the term, loan amount, and credit score of the borrower. For instance, the median rate for borrowers with excellent credit was 13.30%. These statistics are based on actual loan offers by lenders on SuperMoney’s loan marketplace. The only way to know what rate you qualify for is to apply. Find out how to check your rate without hurting your credit.
The median APR for personal loans is currently at 23.39%, a drop of 1.24 points from last week, which had seen an increase of 1.43 points from the previous week. The median loan amount dropped from $13K to $10K. However, this is just the median of all the personal loan offers provided by lenders on our platform.
Personal loan rates vary depending on the type of loan and the credit profile of the borrower. For example, borrowers with excellent credit with a 24-month term received a median APR of 8.99%. Your personal loan rate will depend on multiple factors, such as your credit score, the amount you borrow, and the term of the loan. The only way to know what rate you qualify for is to apply.
Current personal loan rates
These are the median and average APRs by credit score for personal loans this week.
The first thing that may stand out to you is how much higher these rates are than the lowest rates advertised by lenders. Note that these averages are based on all the prequalified loan offers borrowers received on SuperMoney’s platform when applying for a loan and providing lenders with the information required to calculate their rate, not the lowest possible rate lenders will typically highlight.
|Credit score||Range||Average APR||Median APR|
Notice how the average APR is actually higher for borrowers with fair credit than poor credit this week, which is surprising. This illustrates well how your credit score is just one factor when it comes to personal loan rates. It may be that borrowers with excellent credit were applying for larger loan amounts and longer terms this week, which can increase the rate offered.
These rates also only show the averages for lenders that cap their rates at 36%. The average rates are higher in the lower credit tiers when you include lenders with higher rate caps. These averages also aggregate loan offers for a wide range of loan amounts and terms which are also important factors when determining a borrower’s rate.
Average personal loan rates for 24-month loans
This is what the rates look like for borrowers applying for a 24-month loan before and after filtering for loan amounts above $20K
|Credit score||Range||Average APR||Median APR||Avg 24-month & $20K+|
As the graph below shows, the interest rates on personal loans tend to vary considerably over time depending on several factors, such as the federal funds rate, lender policies, and market conditions. Notice the difference when you aggregate all terms and loan amounts and when you only include loans for more than $20,000 and 24-month terms.
How do I find my personal loan rate?
SuperMoney allows you to check your rate without a hard credit pull, so your credit score will not be affected. The calculator below allows you to estimate what your rate will be based on the rates offered to other borrowers with similar credit scores who requested the same loan amount and term. However, your rate today could be very different. The only way to get a firm rate is to apply. Don’t worry, you don’t need a hard pull on your credit to see your rater. So, checking will not hurt your credit score.
Compare those rates with the best rates advertised by lenders. Find out what rate you can get without hurting your credit score.
Personal loan interest rates compared to other loans
As we mentioned above, the rates of personal loans can vary dramatically depending on the loan amount, term, and credit score of the borrower. So comparing personal loans with other forms of credit can get tricky. The graph below uses the latest Federal Reserve data available for 24-month-term personal loans issued by commercial banks. Commercial banks tend to have higher minimum loan amounts and more stringent eligibility requirements. As you can imagine, the rates would look very different if they included all terms and nonbank lenders, which often have more flexible underwriting requirements and higher rates.
The Federal Reserve raised the federal funds rate in mid-December 2022, marking its seventh increase of that year. After four consecutive hikes of 0.75%, the December increase was smaller at 0.50% due to signs of decreasing inflation. So far this year, there have already been three more increases, with more expected.
This increase has led to significant growth in personal loan interest rates. For example, the latest data from the Federal Reserve on the average rates for 24-month personal loans at commercial banks increased from 8.73% in May 2022 to 11.481% by March 2022. Fortunately, most personal loans have fixed rates, which means that current borrowers don’t need to worry about their interest rates changing once their loan is approved.
Potential borrowers should prepare for increasing interest rates, but there are ways to reduce those costs. If you’re currently looking for a personal loan, make sure you shop around before signing the dotted line to ensure you get the best interest rate possible.
Compare the median with the lowest available
Find out what rate you can get in a couple of minutes without dinging your credit.
How are personal loan interest rates determined?
Personal loan rates are influenced by a variety of economic factors and trends, including the Federal Reserve’s monetary policy, inflation, economic growth, credit market conditions, and competition among lenders. When the Federal Reserve raises interest rates, it typically leads to an increase in personal loan rates. Inflation can also impact personal loan rates, as lenders may raise rates to keep up with rising prices. Additionally, lenders may adjust rates based on credit market conditions and competition among lenders for borrowers’ business.
In addition to outside economic forces, the interest rates on personal loans are also influenced by your own financial health, unlike high-yield savings accounts or CD accounts. So, the better your financial health — supported by a high credit score, low debt-to-income ratio, etc. — the better interest rate you can earn on your personal loan.
How does the Federal Reserve change personal loan rates?
Every six to eight weeks, the Federal Reserve’s rate-setting committee holds a two-day meeting to determine the future of the federal funds rate, which can increase, decrease, or remain unchanged. The federal funds rate does not directly impact the interest rates offered by financial institutions for personal loans. Rather, it is the rate at which institutions lend or borrow their excess reserves to each other overnight.
In response to the pandemic, the Fed announced a 0% emergency rate cut in 2020, and the rate remained at that level for two years. In March 2022, the Fed began increasing the rate by 0.25%, with a second increase of 0.50% in May. This was followed by four larger hikes of 0.75% in June, July, September, and November.
The recent easing of inflation led to a more modest 0.50% increase at the December meeting. The Fed has indicated that there will be additional increases in 2023, though it is expected that these will be smaller quarter-point increases.
Will the changing Federal Reserve rates affect you?
Fixed-rate personal loans are the most common type of personal loan, and the interest rate you pay remains constant throughout the loan’s duration. Current borrowers with fixed-rate personal loans do not have to worry about changes in their interest rate or monthly payments.
When you get a fixed-rate personal loan, you secure a fixed interest rate that does not change regardless of market conditions. However, some lenders offer variable-rate personal loans.
If you have a variable-rate personal loan, your interest rate may increase as the federal rate goes up. Transferring your outstanding balance to a fixed-rate debt consolidation loan may be worth considering if you have a variable-rate loan.
How are personal loan rates expected to change?
The Fed’s five rate hikes in 2022 were just the start. The Fed may raise rates further to combat inflation, so we may see more hikes throughout 2023. Although the Fed rate doesn’t affect fixed interest rates for long-term debt like mortgages, it does impact short-term consumer debt and deposit rates. This means that personal loan rates may continue to rise this year and next.
- The median APR for personal loans is currently at 23.39%, a drop of 1.24 points from last week, and the median loan amount dropped by $3,000 to $10,000.
- Borrowers should keep in mind that these are just the median rates, and the actual rate they qualify for will depend on multiple factors, such as their credit score, the amount they borrow, and the loan term.
- Personal loan rates are influenced by a variety of economic factors and trends, including the Federal Reserve’s monetary policy, inflation, economic growth, credit market conditions, and competition among lenders.
- Borrowers can reduce the cost of their personal loans by shopping around and comparing offers from multiple institutions.
- Fixed-rate personal loans are the most common type of personal loan, and the interest rate remains constant throughout the loan’s duration, which means current borrowers with fixed-rate personal loans do not have to worry about changes in their interest rate or monthly payments.
- The Fed is expected to continue raising interest rates in 2023, which may lead to an increase in personal loan rates.
View Article Sources
- National Rates and Rate Caps – Previous Rates — Federal Deposit Insurance Corporation
- Credit Union and Bank Rates 2022 Q1 — National Credit Union Administration
- Consumer Credit – G.19 — Board of Governors of the Federal Reserve System
- Unsecured Personal Loans — SuperMoney
- How to Get Approved for a Personal Loan — SuperMoney
- How To Get a Personal Loan With Fair Credit — SuperMoney
- Choosing the Right Personal Loan Lender for Bad Credit — SuperMoney
- How to Use a Personal Loan to Build Credit — SuperMoney
- 5 Reasons to Avoid Personal Loans — SuperMoney
- How and When to Refinance a Personal Loan — SuperMoney
- A Personal Loan With A Cosigner? It Can Lower Your Rates and More — SuperMoney
- Payday Loans vs. Personal Loans: What You Need To Know — SuperMoney
- Getting a Loan? Here’s How to Get Low Interests Every Time — SuperMoney
- 5 Good Reasons to Take Out a Personal Loan — SuperMoney
- When Should I Consider a Personal Loan — SuperMoney
- Loans Guide For Beginners — SuperMoney
- Average Personal Loan Interest Rate Study — SuperMoney
- Personal Loans Industry Study — SuperMoney