Best Personal Loan Rates for January 2020

Personal loan interest rates currently range from about 5% to 36%. The actual rate you receive depends on multiple factors, such as your credit score, annual income, and debt ratios.

Bankrate's guide to personal loans

By Ben Luthi

Last updated: January 15, 2020

Best personal loans of 2020

Best overall: SoFi

SoFi is an all-around stellar lender. They offer customers an autopay discount, low rates and reward borrowers for being in good financial health. For borrowers who might end up unemployed and unable to make payments, SoFi has a team dedicated to helping customers get back on their feet. If you're looking for a lender who cares, look here.

Pros: Autopay discount of 0.25 percent, offers unemployment protection and help finding a new job, no fees.

Cons: Need to have a good credit score (680 or higher), but this product rewards people for having healthy financial habits.

Lender SoFi
Bankrate Rating 4.1 / 5.0
Min. Credit Score 680
Est. APR 6.20% - 15.24% (with autopay)
Loan Amount $5,000 - $100,000
Term Lengths 2 to 7 years
Min. Annual Income None
Fees None

Read Bankrate's expert SoFi Review

Best for people with good credit: Lightstream

Lightstream is a lender that rewards consumers for having good credit with benefits like autopay discount and a $100 bonus for submitting feedback. With a maximum loan amount of $100,000, individuals looking to make a major purchase, consolidate debt or pay for a wedding should consider Lightstream during their personal loan search.

Pros: Autopay discount of 0.50 percent, accepts cosigners, offers $100 free if you are dissatisfied with your experience and submit feedback.

Cons: Minimum loan amount is $5,000.

Lender Lightstream
Bankrate Rating 4.0 / 5.0
Min. Credit Score 660
Est. APR 4.99%-16.79% (with autopay)
Loan Amount $5,000 – $100,000
Term Lengths 2 to 12 years
Min. Annual Income None
Fees None

Read Bankrate's expert Lightstream Review

Best for people with bad credit: Municipal Credit Union

Municipal Credit Union has been serving the financial needs of its members since 1916. They offer reasonable rates on personal loans for borrowers with bad credit and can be a great option for those looking for a quick deposit of funds and no extraneous fees.

Pros: One flat late fee, accepts cosigners, low interest rates, quick deposit of funds.

Cons: Larger loans need a more established credit history; required to become a member of the credit union.

Lender Municipal Credit Union
Bankrate Rating 4.3 / 5.0
Min. Credit Score None
Est. APR 5.95% - 7.55%
Loan Amount $1,000 – $50,000
Term Lengths 1 to 6 years
Min. Annual Income $15,000
Fees Late fee: $25

Read Bankrate's expert Municipal Credit Union Review

Best for debt consolidation: LendingPoint

LendingPoint looks at an overall financial picture of borrowers, not just their credit score. LendingPoint serves a wide range of consumers, including those with poor credit, and offers quick approval and receiving of funds.

Pros: Low minimum credit score, quick to receive funds, looks at more than just credit score. Accepts some applicants who have filed bankruptcy in the past 12 months.

Cons: APRs range on the high-side from 9.99 percent to 35.99 percent.

Lender LendingPoint
Bankrate Rating 3.6 / 5.0
Min. Credit Score 585
Est. APR 9.99% - 35.99%
Loan Amount $2,000 - $25,000
Term Lengths 2 to 4 years
Min. Annual Income $20,000
Fees Origination fee: 0 percent to 6 percent of the loan amount

Read Bankrate's expert LendingPoint Review

Best for home repairs: Best Egg

Best Egg offers competitive APRs on loans up to $35,000, making it a good option for homeowners who need to fix a roof or make other home repairs.

Pros: Only borrowers with fair credit are eligible.

Cons: Low debt-to-income ratio required.

Lender Best Egg
Bankrate Rating 3.7 / 5.0
Min. Credit Score 640
Est. APR 5.99% - 29.99%
Loan Amount $2,000 - $35,000
Term Lengths 3 to 5 years
Min. Annual Income None
Fees Origination fee: 0.99 percent to 5.99 percent of the loan amount, Late fee: $15

Read Bankrate's expert Best Egg Review

Best for fast funding: Upgrade

Upgrade lets you borrow up to $50,000 and will send the loan funds to your account by the following business day.

Pros: There are no prepayment fees.

Cons: Origination fee comes off the top of loan amount.

Lender Upgrade
Bankrate Rating 4.1 / 5.0
Min. Credit Score 620
Est. APR 7.89% - 35.89%
Loan Amount $1,000 - $50,000
Term Lengths 3 or 5 years
Min. Annual Income None
Fees Origination fee: 1.5 percent to 6 percent of the loan amount, Late fee: Up to $10

Read Bankrate's expert Upgrade Review

Summary of the best personal loan companies of 2020

Est. APR
Loan Term
Min. Loan Amount
Max. Loan Amount
6.20% - 15.24% (with autopay)
2 to 7 years
4.99%-16.79% (with autopay)
2 to 12 years
Municipal Credit Union
5.95% - 7.55%
1 to 6 years
9.99% - 35.99%
2 to 4 years
Best Egg
5.99% - 29.99%
3 to 5 years
7.89% - 35.89%
3 or 5 years

What is a personal loan?

Personal loans are shorter-term loans consumers can receive from banks, credit unions or private lenders, such as online marketplace lenders and non-bank peer-to-peer lenders. The proceeds of the loan can be used for just about any purpose, such as paying off other debt, financing a kitchen renovation or paying for a wedding.

Borrowers receive a single lump sum which is repaid over a number of years. Most personal loans range from 24 months to 60 months. The typical personal loan is repaid in monthly installments similar to a car loan or home mortgage.

Personal loans are typically unsecured, which means they are not backed by collateral such as a car, house or other assets.

If you need cash fast, these loans are a good alternative because the approval process is fairly quick and you can also receive your lump sum sooner than obtaining a home equity line of credit.

Personal loan interest rates

The interest rate for personal loan depends mostly on your credit score. Personal loan rates currently range from 5% to 36%, depending on your credit score. As of January 15, 2020, the average personal loan interest rate is 11.42%.

The average personal loan interest rates range from 10.3% to 12.5% for “excellent” credit scores ranging from 720-850, 13.5% to 15.5% for "good" credit scores of 690-719, 17.8% to 19.9% for "average" credit scores of 630-689 and 28.5% to 32.0% for “poor” credit scores of 300-629.

“Like any loan, a borrower is usually qualified on the basis of credit, income and debt ratios,” says Greg McBride, CFA, chief financial analyst for Bankrate. “Some lenders are more lenient than others but will charge a substantially higher rate for borrowers deemed higher risk.”

Average Personal Loan Rates by Credit Rating

Credit Rating / Score Range Average personal loan interest rate
Excellent (720 - 850) 10.3% - 12.5%
Good (690 to 719) 13.5% - 15.5%
Average (630 to 689) 17.8% - 19.9%
Bad (300 to 629) 28.5% - 32.0%

Rates as of 12/2/2019

Reasons for personal loans

Some of the most common reasons people consider a personal loan are:

Pros of personal loans

  • The convenience of receiving the money upfront in a lump sum
  • You can get the money quickly, in as little as one day, depending on the lender
  • They’re easier to apply for than mortgages or personal lines of credit

“For consumers with good credit, a personal loan can be had at a competitive rate with a quick turnaround,” says McBride.

If a consumer can’t afford to make much more than the minimum payments on a credit card, a personal loan could work out better for them financially because the entire debt would be paid off sooner and they’d pay less in interest, Triggs says. But that’s only if they can afford the single monthly payment.

Cons of personal loans

  • You’ll likely pay a higher APR with an unsecured loan
  • A low credit score can make it more difficult to get the lowest available APR
  • You may have to pay an origination fee to process the loan

“Even for those with good credit that can borrow at low rates, the cost of borrowing is still much higher than if they had an emergency savings reserve sufficient to draw on instead,” McBride says.

The biggest pitfall occurs when the consumer pays off the $12,000 credit card with a personal loan, but then begins to use the card again and ends up running the balance back up to $12,000, Triggs says.

“Now they have to pay that and the personal loan, which in this scenario will be a challenge,” he says.

Another disadvantage of personal loans is that there are few payment options if you lose your job or otherwise can’t afford to pay it. Most credit card companies will work with consumers who suffer real hardship, Triggs says.

How to apply for a personal loan

How to get a personal loan in 8 steps:

  1. Run the numbers.
  2. Check your credit score.
  3. Consider your options.
  4. Choose your loan type.
  5. Shop around for the best rates.
  6. Pick a lender and apply.
  7. Provide necessary documentation.
  8. Accept the loan and start making payments.

Frequently asked questions about personal loans:

What is APR?

APR stands for Annual Percentage Rate. APR refers to the extra amount borrowers pay in interest and fees on an annual basis. Lenders calculate APR on a yearly basis, but borrowers are most often responsible for paying APR on a monthly basis.

For more detail on how APR can affect your monthly payments, check out our personal loan calculator.

What's the difference between a secured loan and an unsecured loan?

Secured loans are backed by a piece of the borrower’s property as collateral, typically a vehicle or house. Because the borrower stands to lose personal property if they default, secured loans tend to have lower interest rates.

Unsecured loans are not backed by collateral, but instead by the borrower’s creditworthiness. Because the lender takes on more of a risk with an unsecured loan, interest rates tend to be higher. Lenders also require that borrowers seeking an unsecured loan have a higher-than-average credit score.

What's a repayment term?

A repayment term refers to the length of time borrowers have to repay their loan. A personal loan's repayment term can vary between one and ten years, depending on the lender.

How does my credit score affect my offer?

Because personal loans are often unsecured, they may come with higher APRs. With unsecured loans, lenders tend to pay extra attention to a borrower's credit score.

The lower a borrower's credit score is, the more they'll have to pay in APR. Lower credit scores can lead to APRs in the double digits.

Loan rates differ by lender, but often opting for a secured loan can help lower APR, even for someone with bad credit. In some cases, secured loans can offer up to 8% less in APR than unsecured loans.

What’s the difference between fixed-rate and variable interest?

Depending on the loan and the lender, you may have a choice between fixed rate (which stays the same over the life of the loan) or variable (which can rise or fall depending on changes in the market).

The interest on a variable rate loan often starts low but may increase over time. The terms of the loan agreement will specify how often the lender is allowed to raise the interest rate, and some loans cap the maximum rate at a certain percentage. By contrast, the payments and interest charges on a fixed-rate loan will remain the same.

Base your decision on whether you prefer the stability of a fixed rate or the possibility of saving on interest with a variable rate.

The bottom line

The personal loan landscape has changed dramatically in ways that make it more efficient for both borrowers and lenders, McBride says.

“Credit availability is better, rates are more competitive and the quick turnaround is a sharp contrast from getting a home equity loan instead,” he says.

Personal loans that are used to pay off higher interest debt can be a great tool to save money on interest over time, Triggs adds.

“Avoiding the pitfalls of getting back into credit card debt, which is one of the biggest issues for consumers who struggle paying their personal loans, is critical to meeting your goal of paying off your debt in a shorter amount of time,” Triggs says. “Remember, you can never borrow your way out of debt. Moving debt from one place to another can save you money, but only your consistent payments and dedication towards your goal will get you out of debt.”

Personal loan companies reviewed by Bankrate

More personal loan options on Bankrate