More favorable repayment terms lead to lower personal loan repayments and lower overall borrowing costs. Here’s what you need to know about current personal loan rates. (iStock)

If you’re considering borrowing a personal loan to consolidate credit card debt, finance a home improvement project, or cover an unexpected expense, now is the time to lock in a low rate.

Personal loan interest rates have been on the decline so far in 2022, with interest rates for the five-year loan term setting a new high of 12.55% during the week of March 28 , according to data from Credible. Three-year personal loan rates averaged 10.33%, slightly higher than the previous record set during the week of March 15.

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Keep reading to learn more about current trends in personal loan rates, as well as how you can lock in favorable terms when borrowing a personal loan. One strategy is to shop around with multiple lenders online to find the lowest possible rate for your financial situation. You can visit Credible to compare personal loan interest rates for free without affecting your credit score.

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Personal loan rates are low for 3 and 5 year terms

Historically, personal loan rates now tend to be much lower than the same time last year. At the end of March 2021, the average prequalified rate for borrowers with good credit was 11.45% for the three-year loan term and 13.21% for the five-year loan term.

Average personal loan rates, 2021 vs 2022

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The current average rate for the five-year personal loan term (12.55%) has plunged 15.41% since Credible began collecting this data in June 2020. Interest rates have peaked for this five-year term. ready in August 2021, when they reached 16.51%. This is a significant advantage for applicants borrowing a loan in today’s rate environment.

If you’re considering borrowing a personal loan, it’s important to compare rates from multiple lenders to find the lowest possible rate for your particular situation. You can search for personal loan offers on Credible’s Financial Products Marketplace and you could receive your funding as soon as the next business day after approval.

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How to lock in a low personal loan rate

Although personal loan rates are currently at or near historic lows, this does not guarantee that all applicants will qualify for a low interest rate. Since personal loans are generally unsecured, lenders determine the terms of your loan based on the length and amount of the loan, as well as your creditworthiness and debt-to-income ratio (DTI). Here are some tips for getting a good rate on a personal loan:

  • Work on building your credit score. According to Credible, applicants with a good credit score of 720 or higher saw a lower rate range than those with fair or poor credit. Those with excellent credit of 780 or more have seen the best interest rates available for personal loans. You can start improving your FICO score by signing up for free credit monitoring through Experian.
  • Choose a shorter loan term. Interest rates tend to be lower for the three-year loan term than they are for the five-year loan term. If you can afford higher loan repayments, a short-term personal loan can pay off in the long run with lower interest charges. You can use a personal loan calculator to estimate your monthly payment and total interest savings.
  • Compare rates between online lenders. Most personal lenders allow you to be prequalified to see your estimated interest rate without affecting your credit score. This allows you to shop around for the lowest possible rate for your financial situation. You can prequalify with multiple lenders at once in Credible’s online personal loan marketplace.

You can browse the current personal loan rates in the table below and visit Credible to learn more about borrowing a personal loan.

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Do you have a financial question, but you don’t know who to contact? Email the Credible Money Expert at moneyexpert@credible.com and your question might be answered by Credible in our Money Expert column.