Best Low-Interest Personal Loans

If you're looking for a low-interest personal loan, you've come to the right place. But starting APRs don't always tell the full story. We identified the best low-interest personal loans for different credit scores by examining average rates received by real borrowers over the last 12 months — LightStream came through with the lowest average interest rates for borrowers with good, very good, and excellent credit. But there are other standouts, especially if you have fair or bad credit.

We’ll cover which lenders are best for low interest rate loans, how to get approved for a low rate, and the interest rate you might get based on your credit score.

Compare personal loan rates

Best low-interest personal loans

The lenders above are partnered with Credible. But we also recommend Discover and Wells Fargo for low rates and no origination fees, as well as PenFed for low-rate and no-fee credit union loans.

What is considered a low interest rate?

A very low interest rate on a personal loan is anything below 10% APR. You’re more likely to qualify for the lowest interest rates if you have excellent credit (a FICO score above 800), low existing debt, and a strong income.

But even if you qualify for a higher rate, it doesn't mean the rate is necessarily high for your credit score — there's wide variation in interest rates across credit scores. And while credit isn't the only factor (income, current debt, and the loan's purpose are important too), it is often the most indicative of the rate you'll get. Check out the average personal loan interest rates below to get a sense of what you might qualify for.  

How to compare low-interest loans

Lenders advertise the range of available rates, loan amounts, and repayment terms. That's useful to a point. But to better compare lenders and potential loans, prequalify first. This involves a soft credit check (so no harm to your score) and a few minutes of your time. You won't get loan offers, but lenders will reveal what they might offer based on basic info you input and the soft credit pull. (When you apply, most lenders conduct a hard credit pull that could ding your score for up to one year.)

1. Compare APRs: APR, or annual percentage rate, considers both the interest rate and any upfront fees to give a true measure of your overall borrowing costs per year for any particular loan. Personal loan lenders are required to advertise APR ranges, so this comparison is relatively easy. APRs for personal loans typically range from 6.49% to 35.99%. 
2. Consider repayment terms: Most lenders offer repayment terms between 2 and 5 years, with some offering 7-year repayment terms and longer. A longer repayment term can help you afford a large loan amount, while a shorter term can save you money on interest.
3. Look at loan amounts: Many lenders offer loans up to $50,000. A few, like LightStream and SoFi, offer loans as large as $100,000. For borrowers in need of even larger loans, BHG Financial has a maximum loan amount of $250,000. However, the amount you'll qualify for depends largely on how much you can afford, your loan's term, and your credit score. 
4. Weigh the wait: Personal loans typically take no more than a few business days to fund, but some lenders offer same-day funding if you apply and are approved by that lender’s same-day funding cutoff time.
5. Check for discounts: Some lenders offer rate discounts for autopay, direct-pay-to-creditors for debt consolidation loans, and more. 
6. Consider origination fees: Some lenders charge an origination fee, or an upfront fee that is deducted from the loan proceeds. But the better your credit, the less likely you are to be charged such a fee. However, if you want to avoid an origination fee entirely, choose a lender that doesn’t charge them, ever — like LightStream, Discover, or Citi.
7. Look at loan purposes: Some lenders approve a wide range of loan purposes, such as LightStream, which offers personal loans for home improvement, debt consolidation, boat or RV purchases, adoption expenses, medical bills, and more. However, other lenders may only consider a handful of loan purposes, such as debt consolidation and credit card refinancing only.

Related: How To Compare Personal Loans: A Step-by-Step Guide

Check Out: Current Personal Loan Interest Rates

Factors that determine your personal loan interest rate

• Credit score: Your credit score is one of the most important determining factors when it comes to the rate you’ll get. Higher scores typically equate to lower rates and vice versa. 
• Income: A high income can help you get a low rate, sometimes even if your credit isn’t perfect. At a minimum, your income should be sufficient to cover your current debt obligations plus the new one you want to take on. 
• Debt-to-income ratio (DTI): This simple calculation shows how much debt you have relative to your income. In other words, it tells lenders how much room you have in your budget for a new monthly payment. Most lenders prefer a DTI below 36% for personal loans, but the lower, the better.
• Loan purpose: What you intend to do with the loan can impact the rate you get. For instance, home improvement loans and credit card consolidation loans through LightStream tend to have lower interest rates compared to loans for medical expenses and family planning.
• Repayment term: Shorter repayment terms tend to have lower interest rates and vice versa. In other words, a shorter loan term, though it increases your monthly payment, can save you a lot of money on interest compared to a longer-term loan.
• Loan amount: Lower loan amounts may carry lower interest rates than higher loan amounts.
• Cosigner or co-borrower: If you apply with a cosigner or co-borrower who has good credit and a strong income, you might qualify for a lower interest rate. The lender takes their financial information into account along with yours in determining the rate. A co-signer is responsible for repaying the loan if you default. With a joint personal loan, you and the co-borrower share responsibility for repayment and have equal access to the loan.

Low-interest loans vs. no-interest loans

Low interest loans are loans that have a low interest rate and, ideally, low or no fees. They may have years-long repayment terms at the low rate.

"No interest” means the lender doesn't charge any interest, but may charge fees instead. In other words, "no interest" doesn’t necessarily mean “low cost.” It can mean very high costs in the case of payday loans and, often, cash advance apps. In these cases, interest charges are replaced by high fees. However, there are also some type of no-interest loans that can be truly no-interest and low-cost (if repaid in full and on time). However repayment terms at the 0% interest rate are often shorter than comparable low-interest loans.

Types of no-interest loans that can be truly low-cost include:

• Short-term "buy now, pay later" (BNPL) apps: Pay in 4 plans are an example of low-cost, low-fee loans
• Some in-store financing promotions: Deferred financing can be low cost or no cost if paid in full before the deferred interest period expires. If not paid in full, they can be high-cost.
• 0% APR credit cards: There are truly zero-cost loans if used for purchases and paid off before the 0% period expires. (0% balance transfers often carry a 3%-5% balance transfer fee.)

No-interest loans also include riskier options like payday loans and cash advance loan apps. 

Pros and cons of low-interest loans

Related: Should I Get a Personal Loan?

How to apply for a low-interest loan

1. Research and compare lenders: Find lenders that meet your specifications, including available loan amounts, repayment terms, funding times, available loan purposes, and eligibility requirements.
2. Prequalify: You can prequalify with many lenders via a personal loan marketplace like Credible or directly on their websites. (Tip: To prequalify with LightStream, go through Credible. You can’t prequalify directly through the lender’s website.) 
3. Fill out and submit the application: You'll likely need to provide proof of income, such as a W-2 or pay stubs, and a legal form of personal identification like a driver's license.
4. Review the loan offer before accepting: If approved, the lender will send an offer your way for review and approval. The rate, loan amount, fees, and repayment schedule could be different from what you prequalified for. Closely review all documents required to accept the loan. Reach out to the lender with any questions.
5. Await funding: Some lenders can provide your funds the same or next business day once you're approved. But you could wait a week, depending on the lender.

Related: How To Apply for a Personal Loan

Other low-interest loans

If you can’t qualify for a low-interest loan or need a longer repayment period or larger loan amount than what’s available to you, consider the following alternatives:

• Home equity loan or a line of credit (HELOC): Home equity loans and HELOCs are often low-interest loans, but they can have much longer terms than other low-interest loan options like personal loans and 0% APR credit cards. You’ll typically need to have at least 15% equity in your home to qualify, and the home will serve as collateral for the loan (meaning you could lose it if you default). Rates tend to be sub-10% APR, repayment terms can extend to 30 years, and loan amounts can be quite large, depending on your equity.
• Friend or family loan: These loan types can have the best rates and terms, but come at the risk of harming relationships if not handled properly. Put everything clearly in writing, including the loan amount, repayment schedule, interest rate, fees (like late fees), and any other conditions (like what the lender is comfortable with you using the loan for). 
• Payday alternative loan (PAL): If you’re struggling to meet the credit requirements for a low-interest loan, you might be eligible for a PAL from a federal credit union. Rates on PALs are capped at 28%, which is often much lower than what you might find on other types of bad credit loans. You’ll need to be or become a member of the credit union to qualify, and loan amounts top out at $2,000.
• Small bank loan: Some banks offer small, short-term loans to existing customers for a low rate or flat fee. For example, loans may be available up to $500 or $1,000 with short repayment terms, such as 3 months.

Learn More: 9 Personal Loan Alternatives

Methodology

Credible evaluated 32 lenders across 1,216 data points to find the best low-interest personal loans. In addition to starting APRs, we evaluated average interest rates overall and across FICO credit score categories (excellent, very good, good, fair, and poor) to determine which lenders have the best rates for different credit profiles. Average personal loan interest rates were determined for Credible partner lenders based on 12 months of closed loans data.

Lender star ratings were established based on the following weighted categories:

• Rates and fees: 18.75%
• Eligibility and options for bad and no credit: 17.5%
• Availability: 12.5%
• Loan amounts and terms: 10%
• Customer satisfaction: 10%
• Customer service: 10%
• Efficiency and fund delivery: 10%
• Discounts: 7.5%
• Credible proprietary data: 3.75%

Credible's team of experts gathered information from each lender's website and from our partners directly. We also considered lender partner data over a 12-month period — including average funding times, average credit scores for approved applicants, and average rates. Each data point is verified by a senior editor to make sure it's accurate at the time of publication.

Learn more about how Credible rates lenders by exploring our personal loans lender rating methodology.

Disclosure: Some lending partners that participate in Credible’s comparison marketplace offer loans to borrowers with scores as low as 550. Borrowers with low scores will have fewer lending options than borrowers with higher credit scores.