March 7, 2022—Rates Move Lower – Forbes Advisor

Today’s Personal Loan Rates: March 7, 2022—Rates Move Lower


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Rates on personal loans declined last week, giving qualified borrowers a chance to pick up a decent interest rate and finance a project, purchase or even unexpected bills.

From February 28 to March 4, the average fixed rate on a three-year personal loan was 10.51% for borrowers with a credit score of 720 or higher who prequalified on Credible.com’s personal loan marketplace. The rate was 10.80% the previous week, according to Credible.com. The average rate on a five-year personal loan fell 0.05% last week to 13.05% from 13.10%.

The most qualified borrowers generally receive the best rates. In fact, well-qualified borrowers may receive a rate that’s significantly lower than average. The rate you receive depends on several factors, including your creditworthiness and the loans available through your chosen lender.

Related: Best Personal Loans

Average Personal Loan Interest Rates by Credit Score

The rates below are average estimated personal loan interest rates according to VantageScore risk tiers, according to Experian. Though the rates below can serve as a general guideline, note that interest rates are ultimately set and determined by lenders.

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.

After you prequalify, the lender can provide you with a snapshot of your loan options. This snapshot generally includes loan rates, terms and limits. To find the best loan for your situation, consider prequalifying at multiple lenders and comparing the terms.

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

How to Receive More Favorable Interest Rates

Personal loan interest rates are based on a number of factors, including your overall creditworthiness, credit score, income and debt-to-income (DTI) ratio. Two quick ways to help you receive more favorable rates include paying down existing debt to help lower your DTI and improving your credit score.

Rod Griffin, senior director of consumer education and advocacy at Experian, recommends “checking your credit report and scores three to six months before you apply for a personal loan,” as this will give you enough time to make any necessary improvements.

While qualification requirements differ across lenders, a minimum credit score of 720 will typically yield you the best terms. If your score falls below this marker, and you’re on a quest for the lowest rate possible, you can take action to improve your score. Try strategies like lowering your credit utilization ratio, removing errors from your credit report and paying your bills early or on time.

How to Calculate Your Personal Loan Payments

To see if it fits into your budget, it’s important to estimate how much you’ll pay on a monthly basis—and how much you’ll pay in interest over the life of the loan. One of the easiest ways to do this is with a personal loan calculator. You’ll need your loan rate, term and amount.

For example, let’s say you have a personal loan with a $5,000 loan amount, 10.51% fixed interest rate and a term of 36 months. The Forbes Advisor personal loan calculator shows your monthly payment would be approximately $163 and you’d pay roughly $851 in interest over the life of the loan. Overall, you would owe $5,851, which includes both principal and interest.



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