June 21, 2022—Rates Rise – Forbes Advisor
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Personal loan rates increased last week. Yet, it is still possible for highly qualified borrowers to get a reasonable interest rate on a personal loan. If you are interested in financing a major purchase or project, now is a good time to shop around for a loan.
From June 13 to June 17, the average fixed rate on a three-year personal loan was 10.96% for borrowers with a credit score of 720 or higher who prequalified on Credible.com’s personal loan marketplace . The rate was 10.84% the previous week, according to Credible.com. The average five-year personal loan rate fell 0.59% last week to 12.74% from 13.33%.
Remember that qualified borrowers can benefit from significantly lower than average rates. The rate you will receive depends on many factors, such as your creditworthiness and the loan you choose.
Related: Best Personal Loans
Get the best rates
Your credit is an important factor in the rates you receive. According to Rod Griffin, senior director of education and consumer advocacy at Experian, “checking your credit report and scores three to six months before applying for a personal loan” is a good idea. This gives you enough time to make the necessary corrections.
A credit score of 720 or better will generally get you the best deal. If you’re not quite in this credit score range, consider taking steps to improve your credit score. Pay off your existing debts to reduce your credit utilization ratio, remove errors from your credit report and pay your bills in advance or on time.
How to calculate your personal loan payments
To see if this fits your budget, it’s important to estimate how much you’ll pay on a monthly basis and how much you’ll pay in interest over the life of the loan. One of the easiest ways to do this is to use a personal loan calculator. You will need the rate, term and amount of your loan.
Let’s say you get a $5,000 personal loan for three years at a fixed rate of 10.96%. You’d pay about $164 a month and about $890 in interest over the life of the loan, according to Forbes Advisor’s Personal Loan Calculator. You would pay $5,890 in total over those three years, which includes both principal and interest.
Average Personal Loan Interest Rates by Credit Score
The rates below are estimated average interest rates for personal loans based on VantageScore risk levels, according to Experian. Although the rates below can serve as a general guideline, note that interest rates are ultimately set and determined by the lenders.