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Getting the lowest interest rate possible can help you reduce the total cost of your loan. But the lowest interest rates are often reserved for those with higher credit scores. If you're looking for low-interest personal loans, we'll walk you through where to look, how to qualify for one, and some of our top picks to consider. If you do manage to snag a low-interest personal loan, be sure to check for additional fees that could cancel out what you’d save in interest payments.
What Is a Good Rate on a Personal Loan?
Any personal loan rate that’s lower than the national average is considered good. The current national average as of this writing is 11.2%, according to the Federal Reserve. The truth of the matter is that borrowers with good or excellent credit scores usually can get the best interest rates.
If you have poor credit or fair credit, you'll want to curb expectations. While it is possible to get approved for a personal loan with a low interest rate, you might need to get a secured personal loan and offer an asset to back it up, or look for a lender that looks at nontraditional criteria.
Best Low-Interest Personal Loans
While the interest rate shouldn't be the only factor in deciding on your personal loan, it’s still an important criteria when researching a personal loan.
Here are our top picks for the best low-interest personal loans:
- Best for Short Credit History: Upstart
- Best for Credit Card Debt Consolidation: Happy Money
- Best for Secured Loans: Best Egg
- Best for Home Improvement Projects: LightStream
- Best for Returning the Loan Option: Discover
Loan results will vary based on creditworthiness, loan purpose, loan amount, and other factors.
Best for Short Credit History: Upstart
Some lenders only work with fair- to good-credit borrowers, but Upstart looks beyond your credit history and financial background by considering your employment and education during its loan approval process.
Upstart
- Loan Amounts$1,000 – $50,000
- Loan Terms36 or 60 months
- APR Range7.8% - 35.99%
- Minimum
Credit Score300 or aboveA credit score is used to indicate the creditworthiness of an applicant, but it is only one of several factors considered for approval. These credit scores alone are not guarantees for approval and should only be used as guidelines.
Using artificial intelligence to help evaluate borrowers, Upstart is a unique lending platform that looks beyond your credit score for personal loan approval.
Overview
Upstart is a first-of-its-kind online lending platform that uses artificial intelligence to help make smarter lending decisions. This means the company considers factors beyond a borrower’s credit score to help determine creditworthiness. Upstart indicates its model has resulted in 43% lower rates for borrowers than traditional credit score models.
Beyond your credit score, Upstart will also look at your employment history, income and level of education when deciding whether to approve you for a loan. The company states that borrowers with credit scores as low as 300 might be able to get approved for a personal loan, though that loan may come with a relatively high APR.
Upstart’s rates are fairly competitive and loan funds are disbursed as soon as one business day after approval. This lender charges origination fees, so it’s important to read the fine print before applying.
Pros
- Considers factors beyond your credit score in lending decisions
- Loans up to $50,000
- Fast funding time
- Check rate without affecting credit score
- Low minimum credit score requirement
Cons
- No physical locations
- Limited repayment terms
- Has origination fees
- High maximum APR
- Not available in Iowa or West Virginia
Best for Credit Card Debt Consolidation: Happy Money
Designed to crush credit card debt, Happy Money offers a streamlined, simplified process to pay off debt between two and five years — and its interest rates aren’t bad either.
Happy Money
- Loan Amounts$5,000 – $40,000
- Loan Terms24 – 60 months
- APR Range11.72% – 17.99%
- Minimum
Credit Score640 or aboveA credit score is used to indicate the creditworthiness of an applicant, but it is only one of several factors considered for approval. These credit scores alone are not guarantees for approval and should only be used as guidelines.
Happy Money can help pay off and consolidate credit card debt into one fixed monthly payment.
Overview
Happy Money, formerly known as Payoff, offers loans for credit card debt payoffs. Eligibility is clearly stated online, so borrowers will appreciate the transparent criteria. Borrowers have the option to have Happy Money deposit funds directly to their credit cards to help streamline the payoff process. Funding can take between three to six business days, which is longer than other lenders, but still considered a decent turnaround time.
Personal loans are accessible to borrowers with fair credit, and there are no options for co-signers or joint applicants. Unfortunately, the loans are not available in Massachusetts or Nevada, so borrowers will need to look elsewhere for lending options.
Pros
- No late fees
- Direct payment to creditors
- Prequalification with no hard credit check
- All loans come with a hardship payment protection plan
Cons
- Most loans can only be used to pay off credit card debt
- Has origination fees
- High loan minimum
- No joint or co-signed loans
- Not available in all states
- Funding slower than other lenders
Best for Secured Loans: Best Egg
If you're open to providing collateral to get a loan with reasonable fees, Best Egg's secured personal loans are unique in that you can offer fixtures attached to your home to back it up.
Best Egg
- Loan Amounts$2,000 – $50,000
- Loan Terms36 – 60 months
- APR Range8.99% – 35.99%
- Minimum
Credit Score700 or aboveA credit score is used to indicate the creditworthiness of an applicant, but it is only one of several factors considered for approval. These credit scores alone are not guarantees for approval and should only be used as guidelines.
Best Egg provides fast personal loans, including unsecured and secured options.
Overview
You can use Best Egg loans for various purposes, including paying for moving expenses, home improvements, debt consolidation, weddings, adoption and more. Borrowers will pay origination fees and need a minimum annual income of $100,000 to qualify for their lowest rates. Best Egg products are not available for residents in Iowa, Vermont, West Virginia, the District of Columbia or U.S. Territories.
Pros
- Loans are funded as soon as the next day
- Loans up to $50,000
- Option for secured loans for homeowners
Cons
- No physical locations
- Has origination fees
- Steep income and credit requirements
- Doesn’t allow co-signers or joint applicants
- Not available in all states
Best for Home Improvement Projects: LightStream
With home improvement loans of up to $100,000 and up to 12 years to pay them back, LightStream can make paying for your bathroom or kitchen remodel more manageable.
LightStream
- Loan Amounts$5,000 – $100,000
- Loan Terms24 – 144 months
- APR Range7.49% – 25.49% (with autopay)
- Minimum
Credit Score660 or aboveA credit score is used to indicate the creditworthiness of an applicant, but it is only one of several factors considered for approval. These credit scores alone are not guarantees for approval and should only be used as guidelines.
LightStream is a solid online lender offering no fees, high loan maximums and low-rate personal loans for several purposes.
Overview
LightStream offers personal loans for several purposes, including debt consolidation, medical expenses, home improvement, weddings, car purchases and more, making this worth considering for those seeking flexibility. The lender offers relatively low rates compared to competitors, including autopay discounts. Its personal loans also have no origination fees or late fees, which can help keep borrowing costs low. However, borrowers will likely need to have good-to-excellent credit in order to be approved for a LightStream personal loan. Overall, it’s a good lender to add to your shortlist if you’re looking for flexible funding, no fees and a low APR. Lightstream may also disburse loans as soon as the same day you’re approved, making this lender a worthy choice if you need fast funding.
Pros
- Low minimum APR
- No origination fees, no late fees
- High loan maximum of $100,000
- Autopay discount
- Joint applications allowed
Cons
- Rates and terms vary by loan purpose
- No soft pull prequalification
- Must have good-to-excellent credit
- No physical branches
Best for Returning the Loan Option: Discover
If plans change, and you don’t need the money after all, Discover lets you cancel your loan up to 30 days after your loan was funded—with no cancellation fees or interest charged.
Discover Personal Loans
- Loan Amounts$2,500 - $40,000
- Loan Terms36 - 84 months
- APR Range7.99% - 24.99%
- Minimum
Credit Score660 or aboveA credit score is used to indicate the creditworthiness of an applicant, but it is only one of several factors considered for approval. These credit scores alone are not guarantees for approval and should only be used as guidelines.
Discover offers personal loans up to $40,000 and no origination fees or prepayment penalties.
Overview
Best known for its credit cards, Discover also offers a range of banking and lending products, including personal loans. Its maximum loan amount is just $40,000, which is relatively low compared to certain competitors. A notable perk of Discover personal loans is that borrowers benefit from no origination fees or prepayment penalties, and an APR range that’s comparable to what other lenders offer.
Discover also provides a credit score range of 660 to 850 on its personal loan page, suggesting its willingness to work with prospective borrowers with fair credit. Many lenders require good or excellent credit, so this accessibility sets Discover apart. Just be aware that if your credit isn’t great, your loan’s interest rate will likely be higher.
Pros
- Competitive APRs
- May be available to fair-credit borrowers
- No origination fees
Cons
- Low maximum loan amount
- No co-borrowers permitted
Where to Find a Low-Interest Loan
You can find a low-interest loan through online lenders or financial institutions such as banks or credit unions that offer personal loans. While many banks and credit unions offer personal loans, bear in mind that you might need to be a member or existing customer to qualify. If a bank does offer loans to non-customers, they might place restrictions on loan amounts.
What Determines My Interest Rate?
Interest rates on a personal loan can vary widely, and you might not get approved for the lowest rate advertised. Your interest rate hinges on a slew of different factors and criteria, such as your credit score and overall financial picture (e.g., your income, employment, and debt-to-income ratio).
Interest rates also depend on the loan terms and repayment period. Typically, the shorter the repayment period, the lower the interest rate.
Related Article
Can You Get a Personal Loan With No Interest?
What to Look for in a Personal Loan
While low interest rates are undoubtedly an attractive and important feature of a personal loan, it's not the entire picture. No two personal loans — or personal loan lenders — are alike. There are several factors at play.
Here are a few things to consider when shopping for a personal loan:
- Monthly payments. Can you manage the monthly payments while juggling your other financial priorities? Have a budget in mind for what you can handle. If you fall behind or miss payments, you risk becoming delinquent and, eventually, defaulting on your loan.
- Funding times. Personal loans tend to be funded quicker than other types of financing, and if you have an emergency, some lenders even offer same-day funding.
- Repayment term. The length of the loan determines your monthly payment and how much you'll pay in interest fees and other costs.
- Prepayment penalty. Some lenders levy a prepayment penalty if you pay your loan off early. Consider whether this is a possibility for you down the line and choose accordingly.
- Fees. Different lenders charge different types of fees, which affect how much you pay during the entire course of the loan. Common personal loan fees include application fees, late fees, or origination fees, which can be anywhere from 1% to 8% of the loan amount.
- Prequalification option: Get a few quotes and compare lenders side-by-side. Many lenders let you get prequalified without hitting your credit, which gives you an idea of the loan amount, interest rate, and terms you most likely will get approved for. Also, study online reviews to gauge customer service reputation and loan approval processes.
What to Do If You Don't Qualify for a Low Interest Rate
If your credit isn't quite up to par, you'll likely receive higher-than-average rates from a lender. But there are some steps you can take to potentially get a lower rate:
- Build your credit. As credit typically is a major determining factor in the interest rate you can get approved for, taking steps to improve your credit can help you scoop up lower rates. Practice solid financial habits such as making on-time debt payments, keeping your credit usage low, and having a diverse credit mix.
- Consider a co-signer or co-borrower. If a lender allows co-signers or co-borrowers, you might qualify for a low-interest personal loan by linking up with someone with strong credit. Note that this route has pros and cons, so proceed with caution.
- Look for lenders that look at nontraditional criteria. If you have little to no credit, some lenders will look beyond your credit score to determine eligibility, such as your employment and education history.
- Go the secured loan route. If you're comfortable doing so, offering an asset to back up your personal loan could help you snag a lower interest rate.
Frequently Asked Questions
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It is possible. If you have strong credit but no income, a lender might be lower your rate if you put up an asset as collateral. You might also be able to qualify for a personal loan with a lower rate if you bring on a co-signer or co-borrower.
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Getting approved for a personal loan with low interest can be challenging if your credit is less-than-spectacular. Many lending institutions usually favor borrowers with higher credit scores by offering them the lowest interest rates.
Some lenders will offer lower interest rates if you have bad credit if you offer an asset as collateral (aka a secured loan). Other lenders might offer you a lower rate if they look beyond traditional credit and financial factors, such as considering your education and employment during the approval process.
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The interest rate is just the cost each year to borrow money, whereas the annual percentage rate includes other costs associated with the loan. The annual percentage rate includes the interest rate, as well as the other fees associated with the loan; therefore, it is a more accurate picture of the total cost of borrowing. Both are formatted as a percentage, but annual percentage rate rates are usually higher than the interest rate.
Jackie Lam
Jackie Lam is a freelance writer with experience covering small business, insurance, budgeting, freelancing and money, and personal finance. Her work has appeared in Salon.com, BuzzFeed, U.S. World & News Report, Time's NextAdvisor, Forbes, and Refinery29. She is an AFC (accredited financial coach) and works with artists, freelancers, and small businesses to improve their relationships with money.
