Current Personal Loan Interest Rates and Trends (Week of March 27, 2023)

The median APR for personal loans is currently at 24.63%, an increase of 1.43 points from last week, which had seen a 2.34-point drop from the previous week. The median loan amount increased by $1,750 to $13,000. 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 11.74%. 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.

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.

Notice how the average APR is actually higher for borrowers with excellent 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.

This is what the rates look like for borrowers applying for a 24-month loan before and after filtering for loan amounts above $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.

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.

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 11.21% by November 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.

Find out what rate you can get in a couple of minutes without dinging your credit.

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.

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.

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.

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.