Personal Loans

Interest rates for personal loans are largely determined by your credit score. Your annual income, debts, the amount you wish to borrow and the purpose of your loan are important, too. 

It’s a good idea to compare rates from different lenders to find the best deal. If you’re not seeing the rate you want, try lowering the amount you want to borrow or improving your credit score.

• Consolidate debt.
• Moving costs.
• Home improvements.
• Emergency expenses.
• Large purchases.

You can apply for a personal loan through a bank, credit union or finance company, including online marketplace lenders.

It helps to have a strong credit score before you apply. If your credit needs work, you could still be approved for a personal loan. But with moderate to bad credit, you may end up paying a higher interest rate.

Additionally, make sure to compare offers from at least three lenders before deciding on one, as this will help you secure the best offer for your financial situation.

Once you’ve found a lender and interest rate that looks right for you, calculate your monthly payments so you can work your loan payment into your overall budget. Simply enter your loan amount, term and interest rate into our personal loan calculator.

Although required documentation varies per lender, you’ll typically be asked to provide the following:

• Proof of  ID: This can be a copy of your driver’s license, passport, birth certificate, military ID, social security card, certificate of citizenship or state-issued ID.
• Employment and income verification: These include copies of your two most recent pay stubs, tax returns, W-2 and 1099 forms or bank statements.
• Proof of address: This can be any document that shows your current address, such as utility bills, bank statements or a lease or rental agreement.

Interest rates for personal loans currently range between 6 percent and 36 percent. But according to a Bankrate study, the average interest rate for a personal loan is above 10.82 percent as of Mar. 22, 2023.

Personal loans can have both positive and negative impacts on your credit score, depending on how you handle them.

When you first apply for a personal loan, the lender runs what’s known as a hard credit inquiry, which can temporarily lower your score by a few percentage points. However, getting approved for a personal loan can actually improve your credit score. That’s because it will add to your credit mix, which accounts for 10 percent of your FICO score. 

Making timely payments on your personal loan can also have a positive impact on your credit, as payment history accounts for 35 percent of your FICO score. That said, if you miss your due date or if you default on your loan, your credit score can drop significantly.

To avoid this, make sure you only borrow what you can afford. If you’re struggling to make payments due to an unforeseen circumstance, contact your lender, as they can provide you with some short-term solutions, such as forbearance or a reduced monthly bill, to help you stay current while you get back on track.

If you are looking for a personal loan to finance a major purchase, look for the best rates available to cut down on interest as much as possible. 

• Best personal loan rates: The best personal loan for you depends on your needs and credit profile. Bankrate evaluated the top personal loans based on factors like available interest rates, fees, term lengths and customer service. Make sure to compare your options before making a decision. 
• Low interest personal loans: Different lenders offer varying interest rates. The interest rate on a loan significantly affects its overall cost. The rate you qualify for depends on your credit score and financial history, but it also depends on your lender. Getting the best rate possible could help you avoid added costs. 
• Installment loans: Installment loans are the most common type of personal loan and the most convenient and easy to keep track of. With an installment loan, you make the same monthly payment until the loan is paid off. 
• RV loans: RV loans are available if you want to finance a recreational vehicle. These are personal loans specifically tailored to help you pay off the purchase of an RV.

Your credit score greatly affects the loan terms and interest rates you might qualify for. Typically, borrowers with the best credit qualify for a lender’s best terms and rates. That said, there are some personal loans specifically for those with less-than-perfect credit. 

• Personal loans for bad credit: Lenders that accept bad credit borrowers look at other criteria to determine eligibility. This can include employment history, education history and income. Loans geared toward bad credit borrowers tend to have higher interest rates. 
• Personal loans for fair credit: Loans that target fair credit borrowers also tend to have more lenient eligibility requirements but may have better interest rates than those for bad credit borrowers. 
• Personal loans for good credit: Loans aimed at good credit borrowers tend to have stricter eligibility requirements but also come with lower interest rates and fees than those for fair credit borrowers.
• Personal loans for excellent credit: Although you’ll need next-to-perfect credit to qualify for these, personal loans for borrowers with excellent credit often offer the most favorable terms and interest rates in the market.

If you struggle to juggle multiple debts, consolidating them with a debt consolidation loan could be a good option. When you consolidate debt, you combine multiple high interest debts into one new loan, ideally with a lower interest rate than the ones you’re currently paying. 

Home improvement loans are personal loans designed to help homeowners make renovations. When shopping for a home improvement loan, you should look for low interest rates, low fees and affordable repayment term options.