January 8, 2025—Rates Drop – Forbes Advisor – Technologist

Rates on personal loans declined last week, giving qualified borrowers a chance to pick up a fair interest rate and finance a project, purchase or even unexpected bills.

From December 30 to January 4, the average fixed interest rate on a three-year personal loan was 14.24% for borrowers with a credit score of 720 or higher who prequalified on Credible.com’s personal loan marketplace. That’s down 1.17% from the previous week, according to Credible.com. The average rate on five-year personal loans fell last week from 22.33% to 21.50%.

Keep in mind that the rate you’ll receive depends on a number of factors, including your creditworthiness and the loans available through your chosen lender. The most creditworthy borrowers may be able to receive rates significantly lower than average.

These rates are accurate as of January 7, 2025.

Related: Best Personal Loans

How To Get the Best Rates

Personal loan interest rates are based on a number of factors, including your overall creditworthiness, credit score, income and debt-to-income (DTI) ratio. Two quick ways to help you receive more favorable rates include paying down existing debt to help lower your DTI and improving your credit score.

Rod Griffin, senior director of consumer education and advocacy at Experian, recommends “checking your credit report and scores three to six months before you apply for a personal loan,” as this will give you enough time to make any necessary improvements.

While qualification requirements differ across lenders, a minimum credit score of 720 will typically yield you the best terms. If your score falls below this marker, and you’re on a quest for the lowest rate possible, you can take action to improve your score. Try strategies like lowering your credit utilization ratio, removing errors from your credit report and paying your bills early or on time.

Where Can I Get a Loan?

You can get personal loans through several institutions. Depending on the loan that you’re looking to borrow and your qualifications, one lender might be better than another. As you look for a personal loan, consider:

• Credit unions: Best for those who meet a local credit union’s eligibility requirements or existing members
• Banks: Best for an in-person experience or if you want to keep all your banking under one institution
• Online lenders: Best for online banking and flexible qualification requirements