Average personal loan interest rate by credit score and how yours compares
Quick Answer
The average personal loan interest rate is 11.90 percent on 24-month personal loans at commercial banks, according to the Federal Reserve. Your own rate depends on your credit score, income and term, so prequalify with several lenders to see where you land.
The average covers bank loans, so credit unions and online lenders may be higher or lower. Compare each offer's APR, not just the stated rate.
At a glance
- Federal Reserve personal loan average
- APR of 11.90 on 24-month bank loans
- Average credit card rate
- 21.19 across all accounts
- How the average is built
- Simple unweighted average of banks’ common rates
- Your own rate
- Depends on credit, income and term
Standard costs for a personal loan
The average annual percentage rate (APR) for a personal loan is 11.90 on 24-month personal loans at commercial banks, according to Federal Reserve Board, G.19 Consumer Credit. You can choose the best personal loan based on this figure, which represents a simple unweighted average of each bank’s most common rate, according to Federal Reserve Board, G.19 Consumer Credit.
Use a rate calculator to compare offers
Borrowers can use a rate calculator to figure the specific costs of a loan. A rate calculator is a digital tool that estimates your potential interest rate based on the information you provide. A rate calculator shows how interest builds over time based on the loan term. This tool helps you weigh how credit unions differ from banks to see which one helps you pay less over the life of the debt.
Personal loan rate table
Suppose you are comparing different loan amounts and terms. In this example, we use the following figures to illustrate the 11.90 percent average.
| Loan amount requested | Loan term length | Average interest rate for personal loan |
|---|---|---|
| A sum of $5,000 | A term of 24 months | A rate of 11.90 percent |
| A sum of $10,000 | A term of 36 months | A rate of 11.90 percent |
| A sum of $2,000 | A term of 12 months | A rate of 11.90 percent |
What is the average interest rate on a personal loan?
The average interest rate on a personal loan depends on the specific lender and your credit profile.
How does the rate change as your credit score changes?
The rate change as your credit score fluctuates depends on risk-based pricing. Lenders use your score to determine the likelihood of a missed payment. Higher scores generally qualify for lower costs because they represent lower risk. Lower scores typically result in higher costs to compensate for increased risk.
Bank interest determines the cost of borrowing
Lenders use bank interest to determine the cost of borrowing based on your credit history. Bank interest is the cost a borrower pays to a financial institution for the privilege of borrowing money. The Federal Reserve consumer credit release reports an average annual percentage rate (APR) of 11.90 on 24-month personal loans at commercial banks. Because this is a bank average, you should use prequalification to see your own rate.
Annual percentage rate (APR): the APR shows your total yearly cost of borrowing
An annual percentage rate (APR) is the yearly cost of borrowing money expressed as a percentage. It includes both the interest rate and other mandatory fees charged by the lender. Knowing this figure helps you compare different loan offers to see which one is truly cheaper.
Loan score and term data
Assume a borrower is evaluating their position based on credit tiers. For example, the following table shows how risk categories relate to costs.
| Credit Score Range | Risk Level Category | Average interest rate on a personal loan |
|---|---|---|
| Excellent Score Range | Lowest Risk Category | Lowest cost option |
| Good Score Range | Moderate Risk Category | Mid range cost |
| Fair Score Range | Higher Risk Category | Higher cost option |
| Poor Score Range | Highest Risk Category | Highest cost option |
Does the loan term change the average
The loan term affects the total cost of borrowing. A longer term spreads payments over more months but may increase the total interest paid over the life of the loan.
Distinguishing between the base rate and APR
The average personal loan interest rate is a base cost, but the figure reported by the Federal Reserve is an annual percentage rate (APR). You can weigh the costs of no credit check loans because an APR includes the interest rate plus certain fees to show the total cost of borrowing over a year.
Unweighted averages help compare different institutions
The Federal Reserve consumer credit release reports an average annual percentage rate (APR) of 11.90 on 24-month personal loans at commercial banks. These figures represent simple unweighted averages of each bank’s most common rate. This reporting method helps borrowers compare the average personal loan interest rates across different institutions.
Is the average a rate or an APR?
The Federal Reserve describes its personal loan figure as an annual percentage rate (APR). This specific figure includes interest and certain fees. The Federal Reserve consumer credit release rates are annual percentage rates, and its new car and personal loan rates are simple unweighted averages of each bank’s most common rate.
How does the average compare with the average credit card rate?
The average personal loan interest rate compares with the average credit card rate by being significantly lower. The average credit card APR is 21.19 across all accounts and 22.36 across accounts assessed interest.
Borrowers often use personal loans to pay off credit cards because the loan average sits below the card average. To succeed, you should see how personal loan interest rates are set to help lower the cost of high-interest revolving debt.
Interest comparison for debt consolidation loans
- Personal loans offer a fixed interest rate for a set term.
- Credit cards typically use variable interest rates that change with market conditions.
- Borrowers can refinance high-interest credit card debt into a personal loan.
- Fixed loan terms help a borrower figure out a specific monthly payment.
- Lower interest rates on loans save a borrower money over the life of the debt.
Estimating your specific personal loan offer
You can find your specific personal loan rate by requesting a prequalification from multiple lenders. This process uses a soft inquiry to show the interest rate each lender would offer you without affecting your credit score. Comparing these individual quotes against national averages helps you see where your offer sits in the market.
Personal loan rate estimates
- Identify multiple lenders that offer personal loans to see various options.
- Request a prequalification from each lender to see the specific rate each firm would offer.
- Review the prequalification documents to confirm the interest rate for each lender.
- Compare these individual quotes with the average personal loan rate to see if your offer is above or below the mean.
How do you find out where your own rate would land?
Prequalification allows you to see a specific interest rate without a hard credit pull. You should calculate your personal rate by requesting these quotes from several different sources. Compare your results to the 11.90 average annual percentage rate reported by the Federal Reserve for 24-month personal loans at commercial banks.
How your credit tier changes the offer
- Borrowers with excellent credit
- If you have excellent credit and qualify for the best tier, you are likeliest to be offered rates below the average.
- Borrowers with fair credit
- You have fair credit if your score is in the middle. You often see rates near or above the average and benefit most from comparing.
- Borrowers with low scores
- For those with low scores below fair, offers are likely above the average. You should check credit unions and secured options.
Mistakes when reading averages
- Expecting the average rate to apply to you is a mistake. Your own offer depends on your credit, income and term.
- Comparing a rate with an APR misleads you because the two are not equal.
Steps to secure the best personal loan interest rate
Securing a competitive rate requires a clear understanding of your credit standing and how it compares to national averages.
Your personal loan checklist
- Check your credit score and reports. Review your latest credit reports to confirm your current score. This ensures you have an accurate baseline for all subsequent loan applications.
- Prequalify with at least three lenders. Submit applications to three different lenders to receive initial offers. Having multiple quotes allows you to see the range of available rates.
- Compare each APR with the Federal Reserve average. Compare your quotes to the Federal Reserve Board, G.19 Consumer Credit report. Check if your offer is lower than 11.90 on 24-month personal loans at commercial banks.
- Ask what would lower your offered rate. Inquire with each lender about specific actions to reduce your interest rate. Ask if a higher down payment or different term would improve your offer.
- Record the date of each quote. Write down the date for every offer received. This helps you track how quickly rates change and ensures you are comparing current offers.
Frequently asked questions
- Why is my offered rate higher than the average?
- Higher costs for an average interest rate on a personal loan occur because lenders use risk-based pricing. Lenders use your score to determine the likelihood of a missed payment, so lower scores typically result in higher costs to compensate for increased risk.
- Is a fixed rate usual for personal loans?
- Personal loans offer a fixed interest rate for a set term. This differs from credit cards, which typically use variable interest rates that change with market conditions.
- Which factors besides the score move your rate?
- Besides your score, lenders weigh your income, existing debts, the loan amount and the term.