Interest rates on personal loans increase for 5-year fixed rate loans

Our goal here at Credible Operations, Inc., NMLS number 1681276, hereinafter referred to as “Credible”, is to give you the tools and security you need to improve your finances. While we promote the products of our partner lenders who compensate us for our services, all opinions are ours.

The latest interest rate trends for personal loans from the Credible market, updated weekly. (iStock)

Borrowers with good credit research personal loans for the past seven days, he prequalified for higher rates for both 3-year and 5-year loans compared to the previous seven days.

For borrowers with a credit score of 720 or greater who used the Credible Marketplace to select a lender between September 15 and September 21:

  • Rates on 3-year fixed-rate loans averaged 11.89%, up from 11.74% seven days earlier and 10.70% a year ago.
  • Rates on 5-year fixed-rate loans averaged 16.03%, up from 15.03% the previous seven days and from 14.35% a year ago.

Personal loans have become a popular way to consolidate and pay off credit card debt and other loans. They can also be used to cover unexpected expenses such as medical expensesdealing with an important purchase or finance home improvement projects.

Personal loan interest rates have increased over the past seven days for both 3 and 5 year loans. Three-year lending rates increased by a slight 0.15 percentage point, while 5-year loans increased by a full percentage point. Also, the interest rates for both terms of the loan are higher than they were this time last year. However, borrowers can take advantage of interest savings with a 3 or 5 year personal loan right now. Both loan terms offer significantly lower interest rates than more expensive loan options such as credit cards.

Whether a personal loan is right for you often depends on multiple factors, including the rate you are eligible for. Comparing multiple lenders and their rates could help you get the best possible personal loan for your needs.

It’s always a good idea to compare purchases on sites like Credible to understand how well you qualify and choose the best option for you.

Here are the latest personal loan interest rate trends from the Credible market, updated monthly.

Trend in the weekly rates of personal loans

The chart above shows the prequalified average rates for borrowers with credit scores of 720 or higher who used the Credible marketplace to select a lender.

For the month of August 2022:

  • 3-year personal loan rates averaged 15.03%, up from 11.04% in July.
  • 5-year personal loan rates averaged 16.52%, up from 13.72% in July.

The rates on personal loans vary considerably based on the credit score and the duration of the loan. If you are curious about what type of personal loan rate you could benefit from, you can use an online tool like Credible to compare the options of different private lenders. Checking your rates will not affect your credit score.

All credible market lenders offer fixed rate loans at competitive rates. Since lenders use different methods to evaluate borrowers, it is a good idea to apply for personal loan rates from multiple lenders so that you can compare your options.

Current personal loan rates based on credit score

In August, the prequalified average rate selected by borrowers was:

  • 9.05% for borrowers with a credit score of 780 or higher who choose a 3 year loan
  • 30.84% ​​for borrowers with a credit score below 600 who choose a 5 year loan

Depending on factors such as your credit score, the type of personal loan you are looking for, and the loan repayment term, the interest rate can vary.

As shown in the graph above, a good credit score can mean a lower interest rate, and rates tend to be higher on loans with fixed interest rates and longer repayment terms.

How to get a lower interest rate

Many factors affect the interest rate a lender might offer you on a personal loan. But you can take some steps to increase your chances of getting a lower interest rate. Here are some tactics to try.

Increase your credit score

Generally, people with higher credit scores qualify for lower interest rates. Steps that can help you improve your credit score over time they include:

  • Pay your bills on time. Payment history is the most important factor in your credit score. Pay all bills in due amount on time.
  • Check your credit report. Look at your credit report to make sure there are no mistakes on it. If you find errors, dispute them with the credit office.
  • Reduce your credit utilization rate. Paying off credit card debt can improve this important credit score factor.
  • Avoid opening new credit accounts. Request and open only the credit accounts you actually need. Too many difficult questions about your credit report in a short amount of time could lower your credit score.

Choose a shorter loan term

Personal loan repayment terms it can range from one to several years. Generally, shorter terms come with lower interest rates since the lender’s money is at risk for a shorter period of time.

If your financial situation allows, requesting a shorter deadline could help you get a lower interest rate. Keep in mind that the shorter term doesn’t just benefit the lender – by choosing a shorter repayment term, you’ll pay less interest over the life of the loan.

Get a cosigner

You may be familiar with the cosigner concept if you have student loans. If your credit isn’t good enough to qualify for the best personal loan interest rates, find a cosigner with good credit it could help you secure a lower interest rate.

Just remember that if you default on the loan, your cosigner will be ready to repay it. And cofirming for a loan could also affect their credit score.

Compare the rates of different lenders

Before applying for a personal loan, it’s a good idea to shop around and compare offers from different lenders to get the lowest rates. Online lenders typically offer the most competitive rates and can be quicker to disburse the loan than a physical establishment.

But don’t worry, comparing rates and terms doesn’t have to be a time-consuming process.

Credible makes it easy. Just enter how much you want to borrow and you will be able to do it compare multiple lenders to choose the one that makes the most sense for you.

About credible

Credible is a multi-lender marketplace that allows consumers to discover financial products that are best suited to their unique circumstances. Credible’s integrations with leading lenders and credit bureaus allow consumers to quickly compare accurate and personalized loan options, without putting their personal information at risk or impacting their credit score. The credible market offers an unrivaled customer experience, as demonstrated by over 4,500 positive reviews on Trustpilot and a TrustScore of 4.7 / 5.

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