Average interest rate for personal loan & How to Get the Lowest Rate

Understanding how personal loan interest rates work can help you save thousands of dollars over time.
Whether you’re applying for a personal, auto, or secured loan, knowing the average rates — and how to qualify for the lowest — is essential to borrowing smart.

What Is the Average Interest Rate on a Personal Loan?

In 2025, average personal loan interest rates in the U.S. range between
8% and 25%, depending on your credit score, lender type, and location.
Borrowers with excellent credit can qualify for rates below 10%, while those with fair or poor credit may see rates above 20%.
For example, the average personal loan interest rate in Texas is around 12%.

What Is a Good Interest Rate on a Personal Loan?

A good personal loan interest rate generally falls between 10% and 13% for borrowers with
a credit score of 700 or higher. The best lenders may offer even lower rates for secured loans
backed by collateral such as a vehicle or savings account. Always compare multiple offers before accepting —
even a 1% difference in APR can significantly affect your total loan cost.

Average Personal Loan Interest Rates by Credit Score — Updated for Late 2025

Your credit score plays the biggest role in determining what interest rate you’ll receive.
Lenders use it to assess how risky it is to lend you money. The higher your score, the lower your rate.
Here’s a breakdown of the average personal loan interest rates by credit score across the U.S. as of late 2025:

For example, if your credit score is around 700, you can expect an average personal loan rate
between 13% and 15%. Improving your score to above 750 can save you thousands in interest
over the life of the loan.

Average Loan Terms and Monthly Payments

Most personal loans run between 3 and 5 years. Using late-2025 market ranges, here are quick answers:

• How much is a $10,000 loan for 5 years? ≈ $233/month at ~14% APR.
• What is the average personal loan term? Common terms are 36–60 months.
• What is the average rate on a $5,000 personal loan? Around 13% APR for qualified borrowers.

These estimates reflect the average interest rate for personal loan ranges we see in late 2025. Your exact payment will vary by credit score, lender, and fees.

Try the Loan Interest Calculator — test your own numbers instantly

Secured vs Unsecured Personal Loans — Which Offers Lower Rates?

Personal loans fall into two main categories: secured and unsecured.
The difference lies in whether the borrower provides collateral to guarantee repayment.
Collateral can include assets such as a vehicle, savings account, or certificate of deposit (CD).

A secured personal loan is backed by that collateral, which reduces the lender’s risk.
Because the lender can reclaim the asset if the borrower defaults, secured loans typically come with
lower interest rates — often several percentage points below unsecured options.
They’re a strong choice for borrowers with fair credit who want a better rate or larger loan amount.

On the other hand, unsecured loans do not require collateral.
Approval depends primarily on your credit score, income, and debt-to-income ratio.
Since these loans are riskier for lenders, they usually carry higher APRs.
However, they’re faster to get and more flexible — ideal for borrowers with good to excellent credit.

💡 Tip: Compare your options with our free
Loan Payoff Calculator
or
Loan Amortization Calculator
to see how interest rates affect your total repayment cost.

Factors That Affect Your Personal Loan Interest Rate

Every borrower receives a different interest rate, even for the same loan amount.
That’s because lenders evaluate several financial factors before setting your personal loan APR.
Here are the key elements that determine how much you’ll pay in interest:

• Credit Score: Higher scores (700+) qualify for lower rates and better terms.
• Loan Term: Shorter terms often mean lower APRs and less total interest.
• Income & Debt-to-Income (DTI): Lower DTI (≤35%) signals affordable payments.
• Lender Type: Banks vs. online lenders (e.g., SoFi, LendingPoint) can price risk differently.
• Secured vs Unsecured: Collateral-backed loans typically offer lower APRs.

Check your estimated rate instantly with our free Loan Interest Calculator

Or try:
Amortization Calculator
·
Loan Comparison

How to Qualify for the Best Personal Loan Rates

Qualifying for the lowest personal loan interest rates takes more than just filling out an application.
Lenders look for borrowers who show consistent income, solid credit history, and stable repayment ability.
Improving these areas can help you secure a better offer — especially from top-rated lenders.

Some banks and credit unions — like SoFi, LightStream,
PenFed Credit Union, and LendingClub — regularly provide the
lowest personal loan rates to qualified applicants.
These lenders typically require a credit score of 700+, a steady income,
and a low debt-to-income ratio. Secured loans may also help you qualify for even better rates by reducing the lender’s risk.

Getting approved for a large amount — such as a $30,000 personal loan — is possible when you
can demonstrate strong repayment capacity. Lenders will verify your income and may request proof of employment
or collateral for higher balances. Maintaining good credit habits, such as on-time payments and low credit utilization,
can make it easier to access competitive offers in 2025 and beyond.

Compare & Calculate

🧮 Try Our Loan Interest Calculator – See How Rate Changes Impact Your Payment

Experiment with different loan amounts, terms, and interest rates to see how they affect your monthly payment
and total cost. This interactive calculator helps you compare scenarios side by side — whether you’re exploring
personal, auto, or refinancing loans.

*This tool is free to use and designed for educational estimates only. Actual terms and rates may vary by lender.*

FAQs

What is a good interest rate on a personal loan?

For well-qualified borrowers, a “good” APR in late 2025 is typically 10%–13% on an unsecured personal loan.
Secured loans (with collateral) can be lower, while fair/poor credit scores may see higher ranges.

What is the average personal loan term?

Most personal loans run 36–60 months. Shorter terms usually come with lower APRs and less total interest,
but higher monthly payments.

How do secured personal loans affect rates?

Secured loans are backed by collateral (e.g., vehicle, savings, CD), which lowers lender risk and often yields
a lower APR than unsecured loans—especially helpful for borrowers with mid-range credit.

What is considered a high interest rate on a loan?

In late 2025, APRs above 20%–22% on an unsecured personal loan are generally considered high. High rates are
common with lower credit scores, longer terms, or lenders that price more risk into their offers.

Average interest rate for personal loan in Texas

A typical personal loan APR in Texas is around ~12% for qualified borrowers, with wide variation by credit score,
lender, and loan type (secured vs unsecured).

Conclusion – Take Control of Your Loan

Understanding how personal loan interest rates work empowers you to make smarter financial decisions.
Even small differences in APR can change your total cost by thousands of dollars.
Compare lenders, use our free calculators, and explore repayment scenarios before signing any agreement.
The more informed you are, the better control you’ll have over your loan — and your financial future.

Always review the fine print, check your credit report regularly, and borrow only what you can comfortably repay.
Smart borrowing starts with clear information and trusted tools.