July 16, 2024—Rates Move Lower – Forbes Advisor – Technologist

Rates on personal loans dropped last week. This means if you’re in the market for a personal loan, whether to finance a project or major purchase, you can grab a worthwhile interest rate, so long as you’re a qualified borrower.

From July 8 to July 13, the average fixed interest rate on a three-year personal loan was 15.38% for borrowers with a credit score of 720 or higher who prequalified on Credible.com’s personal loan marketplace. That’s down 0.20% from the previous week, according to Credible.com. The average rate on five-year personal loans fell last week from 19.69% to 18.93%.

Keep in mind that the rate you’ll receive depends on a number of factors, including your creditworthiness and the loans available through your chosen lender. The most creditworthy borrowers may be able to receive rates significantly lower than average.

These rates are accurate as of July 15, 2024.

Related: Best Personal Loans

How To Compare Personal Loan Rates

If you’re out to get the best rate, be sure to look for lenders who offer a personal loan prequalification process. While many lenders post their rates online, this only gives you a range of what they offer, not an exact rate based on the qualifications you meet. However, when you prequalify for a personal loan, a lender will run a soft credit check to prescreen you, which has no impact on your credit score.

Based on this information, the lender will give you a snapshot of the terms you could qualify for, including loan rates, terms and limits. You can prequalify at multiple lenders and compare the terms to find the best loan for your specific situation.

You aren’t guaranteed approval if you prequalify. Lenders still require that you submit a formal application and additional documentation. After submitting your formal application, lenders typically run a hard credit check, which can ding your credit score by one to five points.

Related: 5 Personal Loan Requirements To Know Before Applying

Where Can You Get a Personal Loan?

You can find a personal loan either online or in-person, depending on the institution. With varying lenders offering personal loans, you can find one that works best for you. Lenders offering personal loans include:

• Banks: Best for in-person banking and opening a personal loan with your current bank
• Online lenders: Best for flexible qualification requirements and an online-only banking experience
• Credit unions: Best for those who meet a nearby credit union’s eligibility requirements or current members

Getting the Best Rates

Your credit is a big factor in the rates you receive. According to Rod Griffin, senior director of consumer education and advocacy at Experian, “checking your credit report and scores three to six months before you apply for a personal loan” is a good idea. This gives you enough time to make any necessary fixes.

A credit score of 720 or better will typically get you the best terms. If you’re not quite in that credit score range, consider taking action to improve your credit score. Pay down existing debt to lower your credit utilization ratio, remove errors from your credit report and pay your bills early or on time.