Finance
This week’s personal loan rates rise for 3- and 5-year terms
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The latest trends in interest rates for personal loans from the Credible marketplace, updated weekly. (iStock)
Borrowers with good credit seeking personal loans during the past seven days prequalified for rates that were higher for 3- and 5-year loans when compared to fixed-rate loans for the seven days before.
For borrowers with credit scores of 720 or higher who used the Credible marketplace to select a lender between July 29 and August 4:
- Rates on 3-year fixed-rate loans averaged 16.49%, up from 15.89% the seven days before and from 14.65% a year ago.
- Rates on 5-year fixed-rate loans averaged 20.41%, up from 19.72% the previous seven days and from 17.87% a year ago.
Personal loans have become a popular way to consolidate debt and pay off credit card debt and other loans. They can also be used to cover unexpected and emergency expenses like medical bills, take care of a major purchase, or fund home improvement projects.
Average personal loan interest rates
Average personal loan interest rates have increased over the last seven days for 3- and 5-year loans. While 3-year loan rates jumped up by 0.60 percentage points, rates on 5-year loans spiked by 0.69 percentage points. Interest rates for 3- and 5-year terms remain higher than they were this time last year, up 1.84 percentage points for 3-year terms and up 2.54 percentage points for 5-year terms.
Still, borrowers can take advantage of interest savings with a 3- or 5-year personal loan, as both loan terms offer lower interest rates on average than higher-cost borrowing options such as credit cards.
But whether a personal loan is right for you depends on multiple factors, including what rate you can qualify for, which is largely based on your credit score. Comparing multiple lenders and their rates helps ensure you get the best personal loan for your needs.
Before applying for a personal loan, use a personal loan marketplace like Credible to comparison shop.
Personal loan weekly rate trends
Here are the latest trends in personal loan interest rates from the Credible marketplace, updated weekly.
The chart above shows average prequalified rates for borrowers with credit scores of 720 or higher who used the Credible marketplace to select a lender.
For the month of July 2024:
- Rates on 3-year personal loans averaged 23.60%, up from 23.02% in June.
- Rates on 5-year personal loans averaged 25.06%, up from 24.81% in June.
Rates on personal loans vary considerably by credit score and loan term. If you’re curious about what kind of personal loan rates you may qualify for, you can use an online tool like Credible to compare options from different private lenders.
All Credible marketplace lenders offer fixed-rate loans at competitive rates. Because lenders use different methods to evaluate borrowers, it’s a good idea to request personal loan rates from multiple lenders so you can compare your options.
Current personal loan rates by credit score
In July, the average prequalified rate selected by borrowers was:
- 13.38% for borrowers with credit scores of 780 or above choosing a 3-year loan
- 32.38% for borrowers with credit scores below 600 choosing a 5-year loan
Depending on factors such as your credit score, which type of personal loan you’re seeking and the loan repayment term, the interest rate can differ.
As shown in the chart above, a good credit score can mean a lower interest rate, and rates tend to be higher on loans with fixed interest rates and longer repayment terms.
Where are interest rates headed?
The Bureau of Labor Statistics (BLS) reported that inflation slowed in May, raising hopes for multiple interest rate cuts in 2024. When the Fed concluded its June meeting, it signaled one cut by the end of the year while holding rates steady. As of now, we anticipate one 25 basis point (0.25 percentage points) cut this year, and a 100 basis point (1 percentage point) cut in 2025.
Currently sitting at 5.25% to 5.50%, the federal funds rate is the highest it’s been since 2001. Sticky inflation and low unemployment had made any cuts seem unlikely as of a week ago. But the news may deliver relief for borrowers burdened with high interest costs and those considering a loan. However, demand for personal loans has increased and all signs point to this trend continuing, while debt levels and delinquency rates have risen as well. This may indicate more consumers will struggle to be approved at low rates or at all — even if we see rates fall.
How to get a lower interest rate
Many factors influence the interest rate a lender might offer you on a personal loan. But you can take some steps to boost your chances of getting a lower interest rate. Here are some tactics to try.
Increase credit score
Generally, people with higher credit scores qualify for lower interest rates. Steps that can help you improve your credit score over time include:
- Pay bills on time: Payment history is the most important factor in your credit score. Pay all your bills on time for the amount due.
- Check your credit report: Look at your credit report to ensure there are no errors on it. If you find errors, dispute them with the credit bureau.
- Lower your credit utilization ratio: Paying down credit card debt can improve this important credit-scoring factor.
- Avoid opening new credit accounts: Only apply for and open credit accounts you actually need. Too many hard inquiries on your credit report in a short amount of time could lower your credit score.
Choose a shorter loan term
Personal loan repayment terms can vary from one to several years. Generally, shorter terms come with lower interest rates, since the lender’s money is at risk for a shorter period of time.
If your financial situation allows, applying for a shorter term could help you score a lower interest rate. Keep in mind the shorter term doesn’t just benefit the lender – by choosing a shorter repayment term, you’ll pay less interest over the life of the loan.
Get a cosigner
You may be familiar with the concept of a cosigner if you have student loans. If your credit isn’t good enough to qualify for the best personal loan interest rates, finding a cosigner with good credit could help you secure a lower interest rate.
Just remember, if you default on the loan, your cosigner will be on the hook to repay it. And cosigning for a loan could also affect their credit score.
Compare rates from different lenders
Before applying for a personal loan, it’s a good idea to shop around and compare offers from several different lenders to get the lowest rates. Online lenders typically offer the most competitive rates – and can be quicker to disburse your loan than a brick-and-mortar establishment.
But don’t worry, comparing rates and terms doesn’t have to be a time-consuming process.
Credible makes it easy. Just enter how much you want to borrow and you’ll be able to compare multiple lenders to choose the one that makes the most sense for you.
About Credible
Credible is a multi-lender marketplace that empowers consumers to discover financial products that are the best fit for their unique circumstances. Credible’s integrations with leading lenders and credit bureaus allow consumers to quickly compare accurate, personalized loan options – without putting their personal information at risk or affecting their credit score. The Credible marketplace provides an unrivaled customer experience, as reflected by over 7,500 positive Trustpilot reviews and a TrustScore of 4.8/5.
An image provided by Pindrop Security shows a fake job candidate the company dubbed “Ivan X,” a scammer using deepfake AI technology to mask his face, according to Pindrop CEO Vijay Balasubramaniyan.
Courtesy: Pindrop Security
When voice authentication startup Pindrop Security posted a recent job opening, one candidate stood out from hundreds of others.
The applicant, a Russian coder named Ivan, seemed to have all the right qualifications for the senior engineering role. When he was interviewed over video last month, however, Pindrop’s recruiter noticed that Ivan’s facial expressions were slightly out of sync with his words.
That’s because the candidate, whom the firm has since dubbed “Ivan X,” was a scammer using deepfake software and other generative AI tools in a bid to get hired by the tech company, said Pindrop CEO and co-founder Vijay Balasubramaniyan.
“Gen AI has blurred the line between what it is to be human and what it means to be machine,” Balasubramaniyan said. “What we’re seeing is that individuals are using these fake identities and fake faces and fake voices to secure employment, even sometimes going so far as doing a face swap with another individual who shows up for the job.”
Companies have long fought off attacks from hackers hoping to exploit vulnerabilities in their software, employees or vendors. Now, another threat has emerged: Job candidates who aren’t who they say they are, wielding AI tools to fabricate photo IDs, generate employment histories and provide answers during interviews.
The rise of AI-generated profiles means that by 2028 globally 1 in 4 job candidates will be fake, according to research and advisory firm Gartner.
The risk to a company from bringing on a fake job seeker can vary, depending on the person’s intentions. Once hired, the impostor can install malware to demand ransom from a company, or steal its customer data, trade secrets or funds, according to Balasubramaniyan. In many cases, the deceitful employees are simply collecting a salary that they wouldn’t otherwise be able to, he said.
‘Massive’ increase
Cybersecurity and cryptocurrency firms have seen a recent surge in fake job seekers, industry experts told CNBC. As the companies are often hiring for remote roles, they present valuable targets for bad actors, these people said.
Ben Sesser, the CEO of BrightHire, said he first heard of the issue a year ago and that the number of fraudulent job candidates has “ramped up massively” this year. His company helps more than 300 corporate clients in finance, tech and health care assess prospective employees in video interviews.
“Humans are generally the weak link in cybersecurity, and the hiring process is an inherently human process with a lot of hand-offs and a lot of different people involved,” Sesser said. “It’s become a weak point that folks are trying to expose.”
But the issue isn’t confined to the tech industry. More than 300 U.S. firms inadvertently hired impostors with ties to North Korea for IT work, including a major national television network, a defense manufacturer, an automaker, and other Fortune 500 companies, the Justice Department alleged in May.
The workers used stolen American identities to apply for remote jobs and deployed remote networks and other techniques to mask their true locations, the DOJ said. They ultimately sent millions of dollars in wages to North Korea to help fund the nation’s weapons program, the Justice Department alleged.
That case, involving a ring of alleged enablers including an American citizen, exposed a small part of what U.S. authorities have said is a sprawling overseas network of thousands of IT workers with North Korean ties. The DOJ has since filed more cases involving North Korean IT workers.
A growth industry
Fake job seekers aren’t letting up, if the experience of Lili Infante, founder and chief executive of CAT Labs, is any indication. Her Florida-based startup sits at the intersection of cybersecurity and cryptocurrency, making it especially alluring to bad actors.
“Every time we list a job posting, we get 100 North Korean spies applying to it,” Infante said. “When you look at their resumes, they look amazing; they use all the keywords for what we’re looking for.”
Infante said her firm leans on an identity-verification company to weed out fake candidates, part of an emerging sector that includes firms such as iDenfy, Jumio and Socure.
An FBI wanted poster shows suspects the agency said are IT workers from North Korea, officially called the Democratic People’s Republic of Korea.
Source: FBI
The fake employee industry has broadened beyond North Koreans in recent years to include criminal groups located in Russia, China, Malaysia and South Korea, according to Roger Grimes, a veteran computer security consultant.
Ironically, some of these fraudulent workers would be considered top performers at most companies, he said.
“Sometimes they’ll do the role poorly, and then sometimes they perform it so well that I’ve actually had a few people tell me they were sorry they had to let them go,” Grimes said.
His employer, the cybersecurity firm KnowBe4, said in October that it inadvertently hired a North Korean software engineer.
The worker used AI to alter a stock photo, combined with a valid but stolen U.S. identity, and got through background checks, including four video interviews, the firm said. He was only discovered after the company found suspicious activity coming from his account.
Fighting deepfakes
Despite the DOJ case and a few other publicized incidents, hiring managers at most companies are generally unaware of the risks of fake job candidates, according to BrightHire’s Sesser.
“They’re responsible for talent strategy and other important things, but being on the front lines of security has historically not been one of them,” he said. “Folks think they’re not experiencing it, but I think it’s probably more likely that they’re just not realizing that it’s going on.”
As the quality of deepfake technology improves, the issue will be harder to avoid, Sesser said.
As for “Ivan X,” Pindrop’s Balasubramaniyan said the startup used a new video authentication program it created to confirm he was a deepfake fraud.
While Ivan claimed to be located in western Ukraine, his IP address indicated he was actually from thousands of miles to the east, in a possible Russian military facility near the North Korean border, the company said.
Pindrop, backed by Andreessen Horowitz and Citi Ventures, was founded more than a decade ago to detect fraud in voice interactions, but may soon pivot to video authentication. Clients include some of the biggest U.S. banks, insurers and health companies.
“We are no longer able to trust our eyes and ears,” Balasubramaniyan said. “Without technology, you’re worse off than a monkey with a random coin toss.”
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