What Are Personal Loan Rates? APR vs. Interest Rate
A personal loan rate is the cost you pay to borrow money, expressed as a percentage. Lenders quote rates in two ways: the interest rate and the annual percentage rate (APR). The interest rate is the base cost of borrowing, while the APR includes the interest rate plus any fees the lender charges, such as origination fees. Because APR reflects the total cost of the loan, it is usually higher than the nominal interest rate and is the better number to compare when shopping for a loan.
Most personal loans are unsecured and typically charge fixed interest rates ranging from roughly 6% to 36%, depending on the lender and your credit profile. APR ranges can vary widely, and the rate you're offered depends on factors such as your credit score, income, debt-to-income ratio, loan amount, and term length.
Average Personal Loan Rates by Credit Score Band
Lenders use credit scores as one of the biggest indicators of risk. The table below shows national average personal loan rates for different FICO score bands, based on Curinos data as of August 2026. Note that these are averages; your actual offered rate will depend on your complete financial profile and the specific lender.
| FICO Score | 36-Month Loan | 60-Month Loan |
|---|---|---|
| 620 | 18.52% | 19.31% |
| 700 | 13.67% | 14.88% |
| 740 | 11.10% | 12.07% |
Sources: Experian
Fixed vs. Variable Personal Loan Rates
Personal loan rates can be fixed or variable. A fixed rate stays the same for the entire loan term, so your monthly payment remains predictable. A variable rate can change over time, typically based on a benchmark rate such as the prime rate. If the benchmark rises, your rate and monthly payment may increase; if it falls, they may decrease. Lenders generally adjust variable rates after changes to the Federal Reserve's benchmark, which influences the prime rate.
Most personal loans are offered with fixed rates, giving borrowers certainty about their monthly payment. Variable-rate personal loans are less common but may be available from some lenders. Choose the type based on your preference for payment stability versus the possibility of a lower initial rate.
Sources: Experian, TD Bank, Alliant Credit Union, Broadview Federal Credit Union
Key Factors That Affect Your Personal Loan Rate
Lenders evaluate several factors when setting your personal loan rate. Understanding these can help you see why you may be offered a particular rate and what you can do to improve it.
- Credit score: A higher credit score typically leads to a lower rate because it signals lower risk to the lender. Borrowers with lower scores may receive higher rates to compensate for the perceived risk.
- Income and employment history: Lenders look at your income and job stability as indicators of your ability to repay the loan. A steady income and consistent employment history can work in your favor.
- Debt-to-income ratio (DTI): This is the percentage of your gross monthly income that goes toward debt payments. Lenders generally view a DTI below 36% favorably, as it suggests you have room in your budget for new debt.
- Loan amount and term: The amount you borrow and the length of the term influence the rate. Shorter terms typically carry lower interest rates, while longer terms may have higher rates because the lender's money is at risk for a longer period. However, shorter terms result in higher monthly payments.
- Fees: Origination fees and other charges can raise your APR. The APR reflects the total cost, so a loan with a lower nominal interest rate but higher fees may end up being more expensive overall.
Sources: Experian, TD Bank, Alliant Credit Union
How to Improve Your Personal Loan Rate Before Applying
If you're planning to take out a personal loan, there are steps you can take to potentially qualify for a better rate. While you can't change your credit history overnight, you can work on the factors that are within your control.
- Check your credit report for errors and dispute any inaccuracies. A higher credit score can lead to more favorable rate offers.
- Pay down existing debt to lower your debt-to-income ratio. A DTI below 36% is generally viewed positively by lenders.
- Consider a shorter loan term. Shorter terms usually come with lower interest rates, even though your monthly payment will be higher.
- Shop around with multiple lenders. Rates can vary significantly, so comparing offers can help you find the most competitive APR for your profile.
- Ask about rate discounts. Some lenders offer a small rate reduction if you enroll in automatic payments or if you have an existing relationship with the institution.
Sources: TD Bank, Alliant Credit Union
Frequently asked questions
What is a good personal loan interest rate?
A good personal loan interest rate depends on your creditworthiness and the current market. As of August 2026, the national average for a 36-month loan was 13.67% for borrowers with a 700 FICO score, according to Curinos data. To get a good rate, aim for a credit score above 700 and a manageable debt-to-income ratio.
Sources: ExperianHow often do personal loan rates change?
Personal loan rates can change frequently. They are influenced by market conditions and the Federal Reserve's policy. Lenders adjust their offered rates based on the prime rate and other benchmarks, so rates can move even between loan offers. National averages are typically updated monthly or more often. For example, Experian reported average rates as of August 2026, while Bankrate published average rates in June 2026. Checking current data from reputable sources before applying is a good practice.
Sources: Experian, Broadview Federal Credit UnionDo personal loans have variable rates?
Yes, some personal loans have variable rates. A variable rate is tied to a benchmark, such as the prime rate, and can change over the life of the loan. If the benchmark rises, your rate and payment may increase; if it falls, they may decrease. However, most personal loans are fixed-rate, meaning the interest rate stays the same for the entire term. When comparing loans, you'll need to decide whether you prefer the predictability of a fixed rate or the potential savings (and risk) of a variable rate.
Sources: TD Bank, Alliant Credit UnionCan I get a personal loan with bad credit?
Yes, it is possible to get a personal loan with bad credit, but you will likely face higher interest rates. Lenders charge higher rates to borrowers with lower credit scores to compensate for the increased risk. For example, according to Curinos data from August 2026, the average rate for a 36-month loan for a borrower with a 620 FICO score was 18.52%, compared to 13.67% for a 700 score. Some lenders specialize in bad-credit personal loans, but they often come with higher fees and less favorable terms.
Sources: ExperianHow does my debt-to-income ratio affect my personal loan rate?
Your debt-to-income ratio (DTI) is the percentage of your gross monthly income that goes toward paying debts. A lower DTI indicates to lenders that you have more room in your budget to take on a new loan, which can result in a lower rate. Lenders generally view a DTI below 36% as favorable. A higher DTI suggests a higher risk of default, so lenders may offer a higher rate or deny the loan altogether. Before applying, consider paying down existing debt to improve your DTI.
Sources: TD Bank, Alliant Credit UnionShould I choose a fixed or variable rate for a personal loan?
Most personal loans are fixed-rate, meaning your interest rate and monthly payment stay the same for the entire term. This provides payment certainty. Variable-rate loans can start with a lower rate, but your rate can increase if the benchmark rises, which could raise your payment. Choose a fixed rate if you prefer predictable payments and want to avoid the risk of rate increases. Choose a variable rate only if you are comfortable with potential payment fluctuations and you believe rates may stay stable or decrease.
Sources: TD Bank, Alliant Credit UnionSources
- Best Personal Loan Rates of August 2026 — Experian
- What Affects Your Interest Rate: Key Factors Lenders Use — Experian
- What to Know About Personal Loan Interest Rates — TD Bank
- APR vs. Interest Rate on a Loan: Key Differences | Discover — Discover
- What factors affect personal loan interest rates? | Alliant Credit Union — Alliant Credit Union
- Understanding personal loan rates | Achieve — Achieve
- Personal Loans vs Student Loans: 2026 Comparison Guide — Broadview Federal Credit Union