How to get a personal loan with a low interest rate: 13 strategies

By Corey Buhay | Published on February 23, 2026

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Personal loans can provide quick cash for just about anything. Need to cover an emergency expense? Finance a home repair? Pay off high-interest debt to escape a predatory lender? A personal loan can fill in savings gaps and help you get ahead. Better yet, personal loans typically have lower interest rates for qualified borrowers than credit cards, making them a smarter financial option over the long run.

If you need a one-time influx of cash, borrowing at a low rate could be what you need to achieve your short-term goals. Here’s how to find personal loans with low interest rates.

Research current rates first

To figure out what a good rate is, you first have to understand the current interest rate environment. The best way to do that is to search reputable financial sites, such as NerdWallet, which list current rates among top lenders. Also browse independent media outlets—Forbes, Business Insider, and CNBC—which keep their own lists.

Make sure to check lenders’ fixed rates, which stay constant throughout your loan term, as well as their variable rates, which will fluctuate over time. Many lenders offer both fixed and variable rates. The variable rates tend to start out lower. That said, they have more potential to increase significantly over time, so they’re not always the best option.

If you have excellent credit and a strong salary, you’ll likely qualify for the lowest interest rates on the market. As a general rule, the higher your credit score is, the lower your interest rate offers will be.

Is now a good time to get a personal loan?

Lenders usually set their personal loan interest rates based on the national interest rate market. So, if national rates change, personal loan rates will, too. The good news is that the Federal Reserve dropped interest rates three times in 2024, and financial analysts predict rates will drop even further in 2025. That could make this year a good time to take out a personal loan.

That said, before you apply for a loan, ask yourself if you absolutely need one. Unsecured personal loans often have higher interest rates than secured loans—such as home and car loans—because there’s nothing that can be repossessed in the event you can’t pay. So, the lender takes on more risk with an unsecured loan. Either way, you’ll be taking on additional debt, so make sure the expense you need to cover is worth it.

Should I get a personal loan?

A personal loan from the right lender—such as a credit union or an online lender with favorable terms—can be a better option than paying sky-high interest rates on credit cards and so-called “payday loans.” But it’s money you have to pay back with interest, so it’s important to make sure you’ve exhausted all other options before you proceed.

A personal loan might be right for you if…

• You want to create your own DIY debt consolidation loan by borrowing a lump sum with a lower interest rate to pay off higher-interest debt
• You need to purchase an essential tool, like a laptop, and you don’t want to pay high credit card interest rates
• You want to take part in a professional development or learning opportunity that’s an investment in your future and is not eligible for student loans
• You need a more affordable way to pay for a wedding or other big life event than credit cards

A personal loan might not be right for you if…

• You’re looking to cover a home-improvement project but you qualify for a lower-interest home equity loan or home equity line of credit (HELOC)
• You want to pay for business expenses that could be covered by a small business loan
• You want to pay for a vacation or another non-essential luxury expense that you can’t afford
• Your expenses are educational and could be covered by student loans¹
• You already have the money you need in your checking account or emergency savings account. Even though it can be scary to deplete your savings, using cash will save you money in interest and fees
• You lost your job and you qualify for unemployment protection. Filing for unemployment could help you bridge the gap with money you won’t have to pay back

Whatever you need the money for, make sure you’ve exhausted all other options before you take on additional debt.

How to get a personal loan with a low interest rate

The higher your credit score, generally the lower rates you’ll be eligible for. Here’s how to boost your score and track down good deals on personal loans.

Make your other payments on time

While you’re shopping around for personal loans, be sure to make on-time payments on all your other expenses. A strong payment history shows lenders that you’re a trustworthy borrower. That makes them more likely to lend to you at a lower rate and at a higher maximum loan amount. (Timely payments can also help you avoid late fees.) The easiest way to stay on track is to set up automatic payments from your bank account. Bonus: some lenders offer a rate discount just for setting up Auto Pay.

Don’t be discouraged if you have a perfect track record and your credit score still isn’t quite where you want it to be. It takes time to build credit, especially when you’re young and haven’t had open lines of credit for very long.

Decrease your loan amount

You may be able to get a lower interest rate by borrowing a smaller amount of money. If you need a personal loan to make a non-urgent purchase, consider waiting a little longer to submit your loan application. That way you have more time to save and won’t have to borrow quite as much.

Choose a shorter repayment term

Often, you’ll pay higher interest rates on longer-term loans because long terms mean more risk to the lender. Conversely, a shorter term decreases the risk they take on, which makes them more likely to offer you a lower rate.

The catch is that shorter loan terms typically come with higher monthly payments. Make sure you’re confident you’ll be able to afford the bills before you complete the application process.

Pay off debts to decrease your debt-to-income ratio

If you don’t need the money immediately, hold off on your personal loan applications for now. Instead, work on paying down existing debts as much as you can. This will reduce your credit utilization ratio—the percentage of your total available credit limit that you’ve used up—and your debt-to-income ratio. Both of these are important factors in most credit score calculations. Lowering them can help boost your score.

Increase your available credit limits

Paying off your debts is just one way to decrease your credit utilization ratio (CUR). Let’s say you have two credit cards that each have a $1,000 limit. If you have a revolving balance of $1,000 between them, that’s a credit utilization of 50%. It’s generally wise to keep your credit utilization under 30%, which shows you’re not spending beyond your means. To achieve a 25% CUR with your current revolving debt, you could either pay it down, or choose one of these options:

• Take out a third card with a $2,000 credit limit, bringing your total available credit to $4,000
• Request a credit line increase on your current cards. If you can qualify for a $2,000 limit on each one, your $1,000 revolving balance becomes just 25% of your $4,000 in available credit

Check your credit history for errors

Even financial institutions make mistakes—and these can impact your credit score if they go unnoticed. Some mistakes are as small as an out-of-date phone number or misspelled address. Others are as big as an incorrect social security number, which could result in someone else’s debts getting recorded under your name.

You can get free reports from each of the three credit bureaus once per week via annualcreditreport.com. If you do discover an incorrect detail, dispute the error immediately. Just understand that it may take time for a fix to kick in. Your score likely won’t change same-day or even within a few business days, so keep an eye on it and follow up as needed.

Ask for a promotion or increase your income with a side gig

If you can’t easily improve your debt-to-income ratio by decreasing your debts, go the other way and try to increase your income. Schedule a meeting with your boss and discuss your recent successes and any extra responsibilities you’ve taken on. Ask if there’s any wiggle room in the company budget to compensate you for that extra work. Keep the tone assertive but polite and curious and see where the conversation takes you.

If you have the time and interest in a side gig, that can be another great way to go. Having another source of income can help you make progress toward paying down existing debts or socking away money for a big expense.

Wait for national interest rates to drop

If the purchase you want to make is not time-sensitive, take some time to see how personal loan rates change. If they drop by the end of 2025 as currently predicted, that could put a new loan within your budget. In the meantime, save up some cash to decrease the amount you need to borrow, or to pay off other debts to improve your credit score.

Compare lenders before starting your online application

Next it’s time to research lenders to see who’s offering the most competitive rates. Do a quick web search for “best personal interest loan rates,” and you’ll turn up quite a few articles that list top lenders and their rate ranges. (Just be sure to cross-reference several sources; some publications get kickbacks for recommending certain lenders, and that could mean other, equally promising options are getting left out.)

Also be sure to compare lenders’ Annual Percentage Rates (APRs) rather than their interest rates alone. APR encompasses any loan fees in addition to interest, so it’s a better measure of the total cost of the loan.

When you have a few top lenders in mind, check your rate with each of them. After all, the rate you’re offered might not be within their advertised rate range, depending on your credit score and other factors. The good news is that this pre-qualification process only involves a soft credit check, which means it won’t impact your credit score.

Next, research your top lenders’ repayment policies and reputations. After all, just because a lender has the lowest rate doesn’t make it the best option. Look for flexible repayment plans, hardship options, and a strong customer service record.

Refinance your loan as soon as you can

If you can’t wait for interest rates to drop, go ahead and take out your new personal loan. Then, keep an eye on rates. If they drop in the future, you can always try to refinance then. Qualifying borrowers can use refinancing to reduce their interest rate even months or years after they first took out their loan.

Use a credit-boosting tool

If you don’t have much credit history, you may be able to add other bills to your credit profile to show that you pay them on time. These could include utility accounts, cell phone bills, and even streaming services. Experian Boost is one tool you can use to do this, which may help give you a few extra points on your credit score. UltraFICO works similarly. There are also a number of rent-reporting services that can help you get credit for rent payments made on time.

Open or close a credit card

You may have heard some mixed messages about whether credit cards are beneficial to your credit. That’s because keeping one or two cards open can be really good for your credit profile: they can help you establish a history of on-time payments that lenders can reference when vetting you for a new loan. But if you have too many credit cards—or if you open a bunch of cards within a short period of time—that signals to credit bureaus that you might not have the funds to cover your day-to-day necessities. For them, that’s a red flag, and they’ll dock your score accordingly. TL;DR: The secret to good credit is having just the right amount of cards, and that can be a fine balancing act.

If you don’t have a credit score (or don’t have much credit history yet), consider opening a first or second credit card. If you already have a lot of cards, do the opposite: avoid opening new ones, and try to pay off as many outstanding balances as possible. You may also want to consider closing some credit cards if you’re racking up annual fees or getting tempted into overspending.

Some banks and credit score services have tools that allow you to estimate how opening or closing a line of credit could impact your credit score. These are just estimates, but it can be useful to play around with these tools to understand options that could help you get where you want to be.

Get a cosigner

If you have bad credit, you may be able to get a lower interest rate by having a cosigner with good credit back your loan. A cosigner essentially promises the lender that they’ll make your loan payments on your behalf if you can’t pay for some reason. Keep in mind that your loan will show up on their credit profile, so you could damage your cosigner’s credit report if you aren’t able to make payments. Make sure your cosigner is an adult you trust, and have a candid conversation about the cosigner arrangement before you move forward.