Key takeout
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Good credit, minimal debt and high take-out income are necessary to earn a low personal loan interest rate.
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Many lenders offer a rate of less than 10% to eligible borrowers.
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Among other factors, improving your finances can help you win the most competitive APR.
Low-interest personal loans have interest rates based on the current market average of 12.58% as of May 28, 2025. To qualify, you will need good credit and a higher income. Before applying it in full, compare your personal loan fees to see which lenders offer the most competitive offer.
Is it considered a low interest rate on personal loans?
Top renders such as Upstart and Lightstream have an annual starting rate (APR) of less than 8%. With good credit and strong income, you may be able to qualify for a low-interest personal loan with an APR of less than 10%.
The rates usually rise and fall to some extent along with the federal fund rate, determining how expensive it is for banks to lend each other. With the average personal loan rates rising last year, even borrowers with good credit could face interest rates above 10%. It is rare to find lenders who offer APRs below 7%.
This also affects what lenders and borrowers consider to be a low rate. It’s not as low as it was a few years ago, but it’s more competitive than the market.
Where to get a low-interest personal loan
A low-interest personal loan is exactly the same as any other loan. The cost will be cheaper. You can find less competitive rates at online lenders, banks and credit unions. However, additional requirements may need to be met to get the lowest available rate.
Online lender
Online lenders may offer low rates and quick applications. In many cases, you can apply for a loan and receive the funds within a week if approved. This makes them quicker, but many reserve the lowest rates for borrowers with a very strong credit profile.
When scoring the minimum APR offered, you will usually need to sign up for automatic payments to get the minimum interest rate advertised on the lender’s website.
bank
Not all banks have personal loans. If you already have a checking or savings account, the person involved may offer a related discount. Just like online lenders, you may need to sign up for automatic payments from that account to get a discounted APR.
Both local and national banks offer low rates to clients with excellent credit for financial support.
Credit Union
Credit unions are owned by members, so many can offer low rates under strict eligibility criteria. Unfortunately, it also means that you have to have an account to qualify for a personal loan.
Overall, credit unions may offer similar fees to banks and online lenders. The main difference is for borrowers who need a fair credit loan at a good rate. If you are eligible, you can take out a small personal loan with a rate of 18%. This is much lower than lenders with a maximum APR of up to 36%.
How to lower your personal loan rate
Eligibility for a low-interest personal loan requires excellent credit, strong income, and a low-income (DTI) ratio.
- I’ll pay off my debt. If your DTI is high, your lender is less likely to offer you a loan. Paying off your debts can help you get a lower rate, as well as improve your credit score by lowering your credit usage.
- Improve your credit score. Lenders only offer the lowest rates to borrowers with excellent credit. Increase your credit score gives you an advantage when searching for low interest rates.
- Compare lenders. You may not be able to qualify for the lowest interest rates on the market, but credit bracket lenders can find low lenders. Compare lenders to see which lenders offer the best conditions, lowest rates and other features that are important to you.
- Please apply for pre-qualification. Most lenders offer a pre-qualification process for personal loans. This allows you to preview the fees and see what you qualify for.
- Choose a short repayment period. Lenders may choose to offer a more competitive rate if they choose a shorter repayment period, typically less than 48 months.
- Find a co-signer. If you are not qualifying for the lowest fee yourself, a properly qualified co-signer or co-load may be helpful. Lenders may be willing to quote lower fees if others share loan liability.
- Use collateral. A secure loan may help you qualify for a lower fee. However, many personal loans are not secure. This makes finding a safe loan difficult.
Conclusion
When it comes to paying less for what you borrow, a low-interest personal loan can be key. Ultimately, a high credit score and income will give you access to the lowest rates.
If you already have top lenders, compare low interest rate loan options to find the best one for your budget. If you are not qualified yet, take the time to build your credit score before applying.