Personal loan rates right now: Tips to lower your borrowing costs

By Anna Baluch | Published on June 24, 2026

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Personal loan rates are not set in stone. In fact, they fluctuate often. According to data from Bankrate, the average interest rate for a personal loan is currently 12.28%, which is lower than rates on most credit cards that hover above 20%.

To help you narrow down your options and zero in on the best personal loan interest rate for your unique situation, let’s dive into how interest rates are set and what you can do to potentially secure a lower rate.

Rates are accurate as of 6/24/26

What drives interest rates

There are several factors that can determine the interest rate you may receive on a personal loan, including:

Credit scores

Most lenders look at your credit score to find out how likely you are to repay your loan. A good to excellent credit score usually leads to the lowest interest rates. On the flipside, fair or bad credit may result in higher-than-average rates.

Market conditions and the Federal Funds Rate

Typically, higher inflation rates mean higher interest rates and vice versa. The Federal Reserve’s federal funds rate will also affect lender rates. When the Fed increases rates, most personal loan lenders do the same.

Loan amounts and repayment terms

You might get a lower rate with a $1,000 personal loan than a $50,000 personal loan because the lender will take on less risk. Loan repayment terms are also important as shorter term loans usually come with better rates.

Benchmark sample rate ranges by credit tier

The table below shows sample interest rates for borrowers with different credit scores using Nerdwallet data.

Rates provided in the above table may not be representative of rates offered by Earnest. These are example rates for comparison purposes only. For current rates, please visit www.earnest.com.

How to shop for rates

When you shop for personal loan rates, it’s a good idea to prequalify with at least a few lenders. By doing so, you can get an idea of potential loan rates and terms, without any impact to your credit. This can make it easier for you to compare loans and find the best one.

Note that once you formally apply for a loan, the lender will likely perform a hard credit pull, which can temporarily lower your score by a few points. In addition to prequalifying, you can use online rate comparison tools to compare personal loan rates and explore your options.

Tips to get a lower rate

Use these strategies to potentially lock in a personal loan with a better interest rate.

• Improve your credit: Your credit score isn’t set in stone. By paying your bills on time and repaying debt, you can increase your score. Note that if your credit history is limited, you might be able to add utility and cell phone bills to build your credit profile.

• Get a cosigner: A cosigner, which can be a trustworthy friend or family member with solid credit, could help you land a loan with a lower interest rate than you’d be able to get on your own. However, they’ll have to repay your loan if you’re unable to for any reason.

• Lower your loan amount: By requesting a smaller amount of money, you might be able to lock in a better rate. This may be an option if you have a non-urgent expense and have some time to save up some cash.

• Choose a shorter repayment term: Since longer terms are riskier for lenders, a shorter repayment term may lead to a lower interest rate. You may want to ask for a 2-year term instead of a 5-year term, for example.

Rate vs. cost trade-offs

While a shorter term loan usually means lower interest rates and less interest over time, it often comes with higher monthly payments. It’s up to you to decide if you can afford the higher monthly payments and whether they’re worth it to save hundreds or in many cases, thousands on interest.

On the flip side, a longer term may lead to smaller monthly payments that work better for your budget but cost you significantly more in interest in the long run.

Let’s say you take out a $10,000 loan with a 5-year term and 14% interest rate. In this case, your monthly payments would be around $232 per month and you’ll pay $3,960 in interest over the life of the loan.

In the event everything remains the same but you’ll reduce your term to 2-years, you’ll pay about $450 per month and only $1,523 in total interest charges. By cutting your loan term by 3 years, you’ll save over $2,400 in interest. That’s a lot of cash you could put towards repaying debt, building your emergency fund, and other financial goals.

Rate and payment example listed above is for illustrative purposes only and may not be representative of rates or terms offered by Earnest.

Prequalify for an Earnest personal loan today

Looking for a personal loan? Check your custom rate with Earnest today, without any negative impact to your credit score. While your credit score is important to us, it’s only one piece of the puzzle.

We’ll consider other factors, such as your education, employment history, and income. We make it a breeze to compare your options and find the best personal loan rate for your needs and personal preferences.

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About the Author

Anna Baluch

Anna Baluch is a freelance finance writer from Cleveland, OH. She enjoys writing content that helps people from all walks of life make good financial decisions. Her areas of expertise include student loans, refinancing, mortgages, personal loans, budgeting, and debt management.

Disclaimer

Disclaimer: This blog post provides personal finance educational information, and it is not intended to provide legal, financial, or tax advice.