Best Low-Interest Personal Loans of April 2024

Financing emergencies, home renovations, vacations, or other large expenses on credit cards can add up. The average credit card interest rate as of February 2024 was 21.59%, according to the Federal Reserve. Rates on two-year personal loans, on the other hand, averaged 12.49%, making a low-interest loan a comparatively affordable alternative. And the lower the rate, the potentially higher the savings. This is why rate-shopping personal loans is crucial. 

Compare low-interest personal loan rates of April 2024

Best low-interest personal loans

The top factor in our selection of the best low-interest loans is the annual percentage rate (APR). This number accounts for both the interest rate on the loan and any upfront costs, like an origination fee. That's why it's better to use when comparing borrowing costs than the interest rate alone. 

But APR isn't the only thing we considered. We also looked at available loan amounts, time to fund, repayment term options, other fees, credit and income requirements, customer access, lender reputation and consumer reviews, plus other features to determine the best low-interest personal loans of 2024.

Upstart: Best fast personal loans for all credit types

Lightstream: Best home improvement loans and low rates

Discover: Best for no origination fees (and low rates)

Zable: Best for short-term loans and same day funding

Upgrade: Best for fair credit

SoFi: Best overall

Best Egg: Best for high close rates if pre-approved

Methodology

Credible evaluated the best low-interest personal loans based on a range of factors, including customer experience, minimum fixed rate, maximum loan amount, funding time, loan terms, fees, discounts, and whether cosigners are accepted. Credible’s team of experts gathered information from each lender’s website customer service department, directly from our partners, and via email support. Each data point was verified by a third party to ensure it was accurate and current.

Learn more about how Credible rates lenders by exploring our Personal Loans Lender Rating Methodology.

How to compare low-interest loans

It’s essential to consider the following when comparing low-interest personal loans:

• APR: The lower the APR, the less you’ll pay for the loan overall. A higher rate can also equal a higher monthly payment, leaving your budget strapped.
• Loan amounts: Some lenders can approve you for loans up to $100,000 or more, but remember, the higher the loan, the more you pay back over time. It’s imperative that you only borrow what you need.
• Repayment terms: Most lenders offer terms between 1 and 7 years. Choose the one that best fits your needs, as a manageable repayment schedule can help you repay your loan successfully. Check the payment amount and date to ensure you can make your payments.
• Fees: Some, but not all lenders, charge origination fees, which may be deducted upfront from the loan amount, as well as more common fees, like late fees and NSF fees. 
• Cosigner option: If you have fair or bad credit and a lender allows a cosigner, you might be able to secure a lower interest rate than you would have on your own. Keep in mind that a cosigner is responsible for payments if you’re unable to pay.
• Time to fund: If you need money by a certain time, check how long it will take the lender to send funds once approved. Many lenders can fund your loan as soon as the same or next business day, while others may take as long as a week.

Learn More: APR vs. Interest Rate on Personal Loans

How does a low-interest loan work?

Personal loans with low-interest rates are like other installment loans. Once approved, you receive a lump-sum payment transferred to your checking account or, perhaps, transferred directly to your creditors in the case of debt consolidation loans. After receiving your funds, you’ll repay your loan monthly in fixed payments based on a predetermined payment schedule and interest.

Most lenders let you pay off a loan early without penalty, but check with yours to make sure before doing so.

How to qualify for low-interest loans

Here’s how you can qualify:

• Good credit score: A FICO score of 670 or higher is considered good credit, which most lenders prefer. It’s possible to secure a loan with a lower score, but your APR will likely be much higher.
• Low debt-to-income ratio: Your debt-to-income ratio (DTI) is how much you pay monthly toward debt, divided by your pretax monthly income and expressed as a percentage. The lower this is, the more likely lenders consider you to be able to repay your loan on time. Most lenders prefer a DTI of 35% or less.
• Sufficient income: The lender needs to see that you have enough income available to make monthly payments for the size of loan you want. They also prefer to see a stable source of income.

Average personal loan interest rates

Depending on your credit score, and the lender you choose, you can expect the following average interest rates, based on Credible data from November 2023:

Low-interest loans vs. no-interest loans

No-interest loans such as “buy now, pay later” apps, in-store financing, and 0% APR credit cards, may seem comparable to low-interest personal loans. And if you can pay off the balance of the loan within the no-interest timeframe, they may be a better choice. 

However, once this timeline ends, or you miss a payment, you could accrue late fees and/or the standard APR may be applied to the remaining balance. The details depend on what type of financing you used. But in most cases, the loan will no longer be no-interest or even low-interest. Especially if you consider that some credit card APRs can be 30% or higher. 

In contrast, low-interest loans require paying interest from the start, but there's no promotional period after which the interest rate rises. You will have a consistent monthly payment with no surprises and a set end date for paying off your loan.

Pros and cons of low-interest loans

Here are some benefits and drawbacks to consider.

Pros

• Lower payments: A low-interest loan will collect less in fees over the life of the loan, which means you pay less.
• Helps build credit: Making on-time loan payments can increase your score, as payment history makes up 35% of your FICO credit score.
• Easy to manage: Low-interest loans have a set payment schedule with a fixed amount, making it easier to budget and have money leftover for other financial goals.

Cons

• Fees: Some lenders add fees for early repayment, missed payments, applications, and origination.
• Ability to borrow too much: Getting a large lump sum at once may influence you to borrow more than you can realistically afford to pay back in the long run, leaving you worse off than before.
• Hard inquiry: Lenders will perform a hard inquiry that can ding your credit score. It’s important to note if you’re working to clean up your credit.

How to apply for a low-interest loan 

Once you’ve decided to apply for a low-interest loan, here’s what you need to do:

1. Research and compare lenders: Look for personal loan lenders who specialize in low-interest loans. Consider other factors for your needs such as APR, time to fund, and loan amounts.
2. Prequalify: You can prequalify with most lenders to get an idea of what you might qualify for before submitting your loan application. With prequalification, a lender performs a soft credit check, which won’t harm your credit score. However, prequalification is not an offer of credit, and the rate you receive may not be the final rate you qualify for once you formally apply.
3. Fill out and submit the application: Fill out your application online or in person. You’ll likely need to provide proof of income such as a W-2, a legal form of personal identification like a driver’s license, and proof of address such as a credit card statement. Once you submit your application, the lender will perform a hard credit pull, which will temporarily lower your credit score.
4. Wait for approval and get your funds: Some lenders can provide your funds the same or next business day once you're approved. But you may wait a week, depending on the lender.

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Alternatives to low-interest loans

If you’re unable to qualify for a low-interest loan, consider these other options.

• 0% APR credit card: A 0% APR credit card can be easier to secure than a low-interest loan. But once the promotional period ends, the standard APR will apply, which is generally much higher than the average personal loan.
• Buy now, pay later: Some of these services allow you to split a purchase into 3-, 6-, or 12-month installments, usually with interest. Many also offer shorter plans with no interest, however, if you make a payment every two weeks (usually for a six-week period).
• In-house financing: Many companies offer in-house financing as an alternative to a low-interest loan. You can set up a payment plan with the company directly. Like credit cards, once any promotional offers end (such as 0% APR), the standard rate will resume and you’ll also have deferred interest.

Low-interest personal loans FAQ

What factors influence low-interest loan rates?

Factors that influence the rate on a low-interest loan are your credit score, income, and overall debt-to-income ratio. Lenders want to see proof that you can manage to repay your loan promptly.

Can I get a low-interest loan with bad credit?

Typically no, as you usually need good to excellent credit to qualify for a low-interest loan. However, you can boost your credit score by paying off smaller debts to lower your DTI or by reviewing your credit report and correcting any errors.

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