High interest can turn a simple loan into an expensive mistake. The right personal loan, at a lower interest rate, can help you cover expenses, manage cash flow, or replace high credit card balances without paying more than you need to.
Many borrowers focus on the loan amount or the monthly payment and miss what really drives the cost: the interest rate. The same loan can be priced very differently depending on your credit score, loan term, and the lender you choose. Small choices around where you apply and how you structure the loan can make a real difference, even if your credit isn’t perfect.
What is a low interest rate for a personal loan?
A “low” interest rate doesn’t look the same for everyone. What counts as low today is also very different from what borrowers saw a few years ago.
Interest rates on personal loans rose sharply after 2022, and while there’s been some easing through 2025, rates are still high by recent standards. The chart shows that average rates on 24-month personal loans from commercial banks dropped slightly during 2025, from around 12.32% in late 2024 to 11.14% by Q3 2025.
When people talk about getting a low-interest personal loan now, they’re usually talking about a rate that’s lower than the national average, not a return to pre-2022 levels. Borrowers with excellent credit still see the lowest interest rates, often starting in the high single digits, but those offers sit well below what most people qualify for.
That’s why low interest is always relative. Even if you don’t qualify for the lowest rates on the market, a personal loan can still be cheaper than credit card interest rates. Most personal loans have fixed pricing, so your interest rate and monthly payment stay the same for the entire loan term, which can make costs easier to manage over time. What matters most is whether the rate works for your budget and keeps total interest as low as possible over time.
How to get a Personal Loan with Low Interest
Improve Your Credit Before Applying
Improving your credit can help you get a lower interest rate on a personal loan. Paying bills on time, keeping balances down, and checking your credit report with each credit bureau for errors can all support your credit score. In personal finance, lenders pay close attention to payment history and overall credit behavior when deciding what rate to offer.
Borrow Only What You Need
The loan amount you choose affects pricing. Borrowing less can make it easier to qualify for a lower monthly rate and keep the total interest down. Higher loan amounts often come with more risk for the lender, which can push rates up.
Choose the Right Loan Term
Loan term length matters. Shorter repayment terms usually come with higher monthly payments, but they often result in lower interest and less total interest paid over the life of the loan. Longer terms can lower the monthly payment, but they often come with higher interest overall.
Compare Loan Offers Carefully
Not all lenders price loans the same way. Comparing loan offers lets you see differences in loan rates, origination fees, and repayment terms. Looking at a few options gives you a better chance to get the best rate for your situation.
Consider Applying With a Cosigner
Applying with a cosigner who has excellent credit may help you qualify for a lower interest rate. Keep in mind that the cosigner is equally responsible for repaying the loan if you can’t.
Read the Fine Print
Before accepting any loan offer, read the fine print. Check for origination fees, repayment rules, and the annual percentage rate listed in the agreement. These details affect the total cost of borrowing, not just the monthly payment.
How do personal loan interest rates work?
Personal loan interest rates are set by each lender and are based on how much risk they see in your application. When you’re applying for a personal loan, the APR and interest rate you’re offered reflect how likely the lender believes you are to repay the loan on time.
Interest is usually built into your monthly payment, so each payment covers both interest and part of the balance.
Things That Affect Personal Loan Interest Rates
Federal Reserve Rates
The Federal Reserve doesn’t set personal loan rates, but it strongly influences them. When the Fed raises rates, borrowing becomes more expensive for lenders, and those costs are usually passed on to borrowers. When rates are lowered, loan rates may come down too, but often more slowly. This is one reason many people see higher interest rates on personal loans today than they did in the past, even if their credit hasn’t changed.
Your Credit Score
Lenders use your credit score to judge how reliable you’ve been with repaying past borrowing. A higher credit score can help you qualify for a low-interest loan, while a lower score often leads to a higher interest rate.
The Type of Loan: Fixed or Variable
Most personal loans are fixed-rate loans, meaning the rate stays the same for the entire loan term. Variable-rate loans can start lower, but the rate can change over time based on market conditions. That can lead to higher monthly payments later on, which is why fixed-rate loans are often easier to manage.
CUR vs DTI Ratios
Lenders look closely at your credit utilization ratio, sometimes called utilization, which shows how much of your available credit you’re using. High utilization can signal risk, even if you pay on time. Your debt-to-income ratio also matters. This compares your monthly debt payments to your income. A lower ratio can make it easier to qualify for a lower interest rate because it shows you have room in your budget to repay the loan.
Where to Get a Low-Interest Personal Loan
Quick View: Personal Loan Options
| Lender Type | Typical Rates | Credit Requirements | Speed | What to Know |
| Online lenders | Competitive rates across credit ranges | Flexible, including fair and bad credit | Fast | Easier comparisons and quicker decisions |
| Banks | Often, the lowest rates are for borrowers with high credit scores | High credit score, stable income | Slower | Best suited to borrowers with excellent credit and an existing relationship |
| Credit unions | Often lower than banks | Membership required, good credit | Moderate | May offer slightly better terms but fewer options |
Where you apply can have a big impact on the rate you’re offered. Traditional banks and credit unions often reserve their lowest rates for borrowers with excellent credit and long credit histories. Approval can also take longer, which isn’t ideal if you need funds quickly.
Online lenders tend to be more flexible. Many offer competitive rates, faster decisions, and simpler applications. They’re often a better fit for borrowers who don’t meet strict bank criteria or who want to compare options without applying in multiple places.
Can you get low-interest personal loans with bad credit?
Getting a low-interest personal loan with bad credit is harder, but it’s not always off the table. The important thing is having a grasp of what “low” means for your situation and what lenders actually look at beyond your credit score.
Borrowers with bad credit usually won’t qualify for the lowest interest rates advertised. Those are typically reserved for people with excellent credit and long credit histories. That said, some lenders may be able to offer a lower rate than expected if other parts of your application are strong.
Even if you don’t qualify for the lowest rates, a personal loan can still cost less than higher-interest alternatives. The aim is to find the lowest rate available to you and repayments that fit your budget.
How Yup Loans Helps You Find Better Loan Options
Finding a personal loan with a lower interest rate often comes down to comparison. The challenge is that applying with multiple lenders takes time and can hurt your credit if each one runs a hard check.
Yup Loans simplifies that process. With one application, you’re connected to a wide panel of lenders, including those open to working with borrowers who have fair or bad credit. This allows you to review potential loan offers in one place and compare rates, loan terms, and fees before making a decision.
Get started today, and request funds to explore your options and choose a loan that fits your budget.