Personal loan interest rates edge up for 3-year loans (2023)

During the last seven days, borrowers with good credit looking for personal loans prequalified for rates that were higher for 3-year loans and lower for 5-year loans when compared to fixed-rate loans for the seven days before.

Borrowers with credit scores of 720 or higher who used the Credible marketplace to select a lender between May 11 and May 17 saw the following trends:

  • Rates on 3-year fixed-rate loans averaged 14.51%, up from 14.29% the previous seven days and up from 10.13% a year ago.
  • Rates on 5-year fixed-rate loans averaged 17.54%, down from 17.84% over the previous seven days and up from 13.56% a year ago.

Personal loans can be a great option for consolidating and paying off debt. You can also use personal loans for a variety of other reasons, including covering medical bills and big purchases or funding home improvement projects.

Personal loan interest rates climbed over the last seven days for 3-year loans but edged down for 5-year loans. Rates for 3-year loans rose 0.22 percentage points, while rates for 5-year loans lowered 0.3 percentage points. Interest rates for both loan terms remain higher than they were this time last year. Still, borrowers can take advantage of interest savings with a 3- or 5-year personal loan right now. Both loan terms offer interest rates that are much lower than higher-cost borrowing options such as credit cards.

When determining if a personal loan is right for you, you’ll need to consider several factors, including what rate you can qualify for. Comparing multiple lenders and rates could help ensure you get the best possible personal loan for you.

If you’re thinking about borrowing, lets you easily compare personal loan rates in minutes.

Here are the most recent trends in personal loan interest rates from the Credible marketplace, updated weekly.

Personal loan weekly rate trends

The chart above presents average prequalified rates for borrowers with credit scores of 720 or higher who used the Credible marketplace to choose a personal loan lender. Today’s personal loan interest rates may differ for borrowers with lower credit scores.

For the month of April 2023:

  • Rates on 3-year personal loans averaged 20.98%, up from 10.35% in March.
  • Rates on 5-year personal loans averaged 22.20%, up from 12.79% in March.

Current personal loan interest rates vary by lender, as well as by credit score and loan term. You can use an online tool like Credible to compare loan options from different private lenders. Checking your rates won’t affect your credit score.

All Credible marketplace lenders offer fixed-rate loans at competitive rates. It’s a good idea to request personal loan rates from multiple lenders to compare your options since lenders use different methods to evaluate borrowers.

Current personal loan rates by credit score

In April, the average prequalified rate selected by borrowers was:

  • Rates on 3-year personal loans averaged 20.98%, up from 10.35% in March.
  • Rates on 5-year personal loans averaged 22.20%, up from 12.79% in March.

Depending on different factors, like your credit score, which type of personal loan you’re seeking, and the loan repayment term, the interest rate can differ.

As shown in the chart above, a good credit score can lead to a lower interest rate. Today’s personal loan rates tend to be higher on loans with fixed interest rates and longer repayment terms.

How to get a lower interest rate

A multitude of factors influence the interest rate a lender may offer you on a personal loan. Luckily, you can boost your chances of getting a lower interest rate by taking a few steps. Here are some strategies to help you qualify for a lower interest rate.

Improve your credit score

Generally, people with higher credit scores qualify for lower interest rates. Steps that can help you improve your credit score over time include:

  • Pay your bills on time. Payment history is the most important factor in your credit score. Pay all your bills on time for the amount due.
  • Review your credit report. Look at your credit report and check for any errors. If you find errors, dispute them with the credit bureau.
  • Decrease your credit utilization ratio. Paying down credit card debt can improve this important credit scoring factor.
  • Limit new credit accounts. Only apply for and open credit accounts you actually need. Too many hard inquiries on your credit report in a short amount of time could lower your credit score.

Select a shorter loan term

Personal loan repayment terms can range from one to a few years. Shorter terms typically come with lower interest rates since the lender’s money is at risk for a shorter period of time.

If your financial situation allows, applying for a shorter term could help you score a lower interest rate. Keep in mind the shorter term doesn’t just benefit the lender — by choosing a shorter repayment term, you’ll pay less interest over the life of the loan.

Consider adding a cosigner

You may be familiar with the concept of a cosigner if you have student loans. If your credit isn’t good enough to qualify for the best personal loan interest rates, finding a cosigner with good credit could help you secure a lower interest rate.

Just remember, if you default on the loan, your cosigner will be on the hook to repay it. And cosigning for a loan could also affect their credit score.

Compare rates from different lenders

Before you apply for a personal loan, it’s a good idea to shop around and compare offers from a few different lenders to get the lowest rate for you. Online lenders typically offer the most competitive rates, and they can be quicker to disburse your loan than a brick-and-mortar establishment.

How to choose the best lender

When comparing your options for a personal loan, there are several factors to consider:

  • Interest rate: Your personal loan rate determines the cost of your loan over time. It can change depending on a few factors, including your credit score and your repayment term.

    For example, if your credit score is considered good to excellent (670 and up), you may be eligible for a lower interest rate. But if your credit score is lower than 670, your interest rate could be higher, and you’ll pay more in interest over the life of the loan.

  • Repayment terms: Depending on the lender, you may choose a term from one to seven years. Typically, it’s recommended to choose the shortest term possible to keep interest costs down.
  • Loan amounts: It’s recommended to borrow only what you need — and can realistically afford to repay. Borrowing too much means paying more in interest over the life of the loan. Most reputable personal loan companies generally allow you to borrow anywhere from $600 to $100,000, though restrictions vary by lender.
  • Fees: Lenders may have surcharges for application, origination, and late payments. These fees can add to the cost of your loan.
  • Time to fund: Once you’re approved, you can find lenders who will fund your loan as soon as the next business day or up to one week after approval. Keep in mind that the time to fund varies by lender.

Be sure to find a lender who fits all, or most of, these factors for your loan.

How to calculate your monthly payment

A few factors can affect your monthly dues and your total interest costs:

  1. Loan amount
  2. Interest rate
  3. Repayment term

Aside from the principal amount you borrow, your monthly payment is also affected by the annual interest rate and repayment term.

For example, let’s say you take out a $20,000 loan with an interest rate of 15% and a repayment term of seven years, your monthly payment will be $386, and you’ll pay a total of $12,419 in interest. By the time you pay off your loan, you will have paid $32,418.

To determine how the interest rate and repayment term affect the overall cost, let’s use the same loan amount but with an interest rate of 8% and a repayment term of five years. Your monthly payment would be $406, but you would pay an additional $4,332 in total interest, bringing your overall cost to $24,331.

Having a lower interest rate and lower loan term can increase your monthly payment (since you’re essentially paying it off much sooner), but your total cost will be significantly lower than if you had a higher interest rate and a longer repayment period.

You can use a personal loan calculator to determine your own monthly payment and the total interest you’ll pay over the life of your loan.

Pros and cons of personal loans


  • Fixed monthly payments. Personal loans come with fixed monthly dues and a predetermined pay-off date for your loan.
  • Lower interest rates than credit cards. However, keep in mind that the rate you receive depends on your credit score.
  • Funding times are quick. You can get your loan funds as soon as the next business day or within a week, depending on the lender.


  • May be difficult to qualify if you have bad credit. Research lenders who allow co-borrower or cosigners, a person who agrees to make payments in the event you’re unable to. Some lenders also offer secured loans that rely on collateral instead of your credit score.
  • Monthly payments can be higher. Personal loans usually require a higher monthly payment than credit cards, so you can zero your balance by the end of the loan term. Depending on your situation, a higher monthly payment could be harder to manage.
  • Additional fees. Some lenders charge an origination fee that’s taken out of the loan balance. When researching lenders, consider what fees they charge and whether you can afford them.

Factors that affect personal loan interest rates

Your credit and income, among other markers, help lenders determine what rate you receive.

  • Debt-to-income ratio: Lenders compare your monthly debt obligations to your gross monthly income. The ratio accounts for debts like loans, mortgages, and credit cards. Lenders prefer debt-to-income ratios of 43% or less.
  • Credit score: Requirements can vary by lender, but typically you should expect a minimum score of 670 or higher.
  • Employment and income: Lenders want to see that you can pay your debt and that you have stable employment with regular income. They’ll usually ask you to verify this with pay stubs or W-2s.
  • Loan term: Most personal loans range from one to seven years, but you can find longer loan terms. However, the longer the term, the higher the rate will be.
  • Amount: If you’re planning to borrow a large amount, expect your rate to be higher. That’s because lenders are taking on more risk in the event you can’t pay back that amount.

About Credible

Credible is a multi-lender marketplace that empowers consumers to discover financial products that are the best fit for their unique circumstances. Credible’s integrations with leading lenders and credit bureaus allow consumers to quickly compare accurate, personalized loan options ― without putting their personal information at risk or affecting their credit score. The Credible marketplace provides an unrivaled customer experience, as reflected by over 5,200 positive Trustpilot reviews and a TrustScore of 4.7/5.

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