Finance

This week’s personal loan rates fall for 3- and 5-year terms

Published

8 months ago

August 22, 2024

Business Finance News

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 lower 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 August 15 and August 21:

Rates on 3-year fixed-rate loans averaged 15.85%, down from 15.99% the seven days before and up from 15.37% a year ago.
Rates on 5-year fixed-rate loans averaged 21.61%, down from 22.07% the previous seven days and up from 19.11% 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 decreased over the last seven days for 3- and 5-year loans. While 3-year loan rates edged down by 0.14 percentage points, rates on 5-year loans fell by 0.46 percentage points. Interest rates for 3- and 5-year terms remain higher than they were this time last year, up 0.48 percentage points for 3-year terms and up 2.50 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.

Finance

Trump pivot on tariffs shows Wall Street still has a seat at his table

Published

1 hour ago

April 10, 2025

Business Finance News

Jamie Dimon, CEO of JPMorgan Chase, testifies during the Senate Banking, Housing and Urban Affairs Committee hearing titled Annual Oversight of Wall Street Firms, in the Hart Building on Dec. 6, 2023.

Tom Williams | Cq-roll Call, Inc. | Getty Images

With each passing day since President Donald Trump‘s sweeping tariff announcement last week, a growing sense of unease had begun to pervade Wall Street.

As stocks plunged and even the safe haven of U.S. Treasurys were selling off, investors, executives and analysts started to fret that a core assumption from the first Trump presidency may no longer apply.

Amid the market carnage, the world’s most powerful person showed that he had a greater tolerance for inflicting pain on investors than anyone had anticipated. Time after time, he and his deputies denied that the administration would back off from the highest American tariff regime in a century, sometimes inferring that Wall Street would have to suffer so that Main Street could thrive.

“It goes without saying that last week’s price action was shocking to see as the market has begun to rewrite completely its sense for what a second Trump presidency means for the economy,” said R. Scott Siefers, a Piper Sandler analyst, earlier this week.

So it came as a huge relief to investors when, minutes after 1 p.m. ET on Wednesday, Trump relented by rolling back the highest tariffs on most countries except China, sparking the biggest one-day stock rally for the S&P 500 since the depths of the 2008 financial crisis.

Despite a presidency in which Trump has tested the limits of executive power — bulldozing federal agencies and laying off thousands of government employees, for example — the episode shows that the market, and by proxy Wall Street statesmen like JPMorgan Chase CEO Jamie Dimon who can explain its gyrations, are still guardrails on the administration.

Later Wednesday afternoon, Trump told reporters that he pivoted after seeing how markets were reacting — getting “yippy,” in his words — and took to heart Dimon’s warning in a morning TV appearance that the policy was pushing the U.S. economy into recession.

Dimon’s appearance in a Fox news interview was planned more than a month ago and wasn’t a last-minute decision meant to sway the president, according to a person with knowledge of the JPMorgan CEO’s schedule.

Bond vigilantes

Of particular concern to Trump and his advisors was the fear that his tariff policy could incite a global financial crisis after yields on U.S. government bonds jumped, according to the New York Times, which cited people with knowledge of the president’s thinking.

“The stock market, bond market and capital markets are, to a degree, a governor on the actions that are taken,” said Mike Mayo, the Wells Fargo bank analyst. “You were hearing about parts of the bond market that were under stress, trades that were blowing up. You push so hard, but you don’t want it to break.”

Typically, investors turn to Treasurys in times of uncertainty, but the sell-off indicated that institutional or sovereign players were dumping holdings, leading to higher borrowing costs for the government, businesses and consumers. That could’ve forced the Federal Reserve to intervene, as it has in previous crises, by slashing rates or acting as buyer of last resort for government bonds.

Ed Yardeni on tariff pause: This is a positive development for the economy

“The bond market was anticipating a real crisis,” Ed Yardeni, the veteran markets analyst, told CNBC’s Scott Wapner on Wednesday.

Yardeni said it was the “bond vigilantes” that got Trump’s attention; the term refers to the idea that investors can act as a type of enforcer on government behavior viewed as making it less likely they’ll get repaid.

Amid the market churn, Wall Street executives had reportedly worried that they didn’t have the influence they did under the first Trump administration, when ex-Goldman partners including Steven Mnuchin and Gary Cohn could be relied upon.

But this last week also showed investors that, in his mission to remake the global order of the past century, Trump is willing to take his adversarial approach with trading partners and the larger economy to the knife’s edge, which only invites more volatility.

‘Chaos discount’

Banks, closely watched for the central role they play in lending to corporations and consumers, entered the year with great enthusiasm after Trump’s election.

The setup was as promising as it had been in decades, according to Mayo and other analysts: A strengthening economy would help boost loan demand, while lower interest rates, deregulation and the return of deals activity including mergers and IPO listings would only add fuel to the fire.

Instead, by the last weekend, bank stocks were in a bear market, having given up all their gains since the election, on fears that Trump was steering the economy to recession. Amid the tumult, it’s likely that reports will show that deal-making slowed as corporate leaders adopt a wait-and-see attitude.

“The chaos discount, we call it,” said Brian Foran, an analyst at Truist bank.

Foran and other analysts said the Trump factor made it difficult to forecast whether the economy was heading for recession, which banks would be winners and losers in a trade war and, therefore, how much they should be worth.

Investors will next focus on JPMorgan, which kicks off the first-quarter earnings season on Friday. They will likely press Dimon and other CEOs about the health of the economy and how consumers and businesses are faring during tariff negotiations.

Wednesday’s reprieve could prove short lived. The day after Trump’s announcement and the historic rally, markets continued to decline. There remains a trade dispute between the world’s two largest economies, each with their own needs and vulnerabilities, and an unclear path to compromise. And universal tariffs of 10% are still in effect.

“We got close, and that’s a very uncomfortable place to be,” Mohamed El-Erian, chief economic advisor of Allianz, the Munich-based asset manager, said Wednesday on CNBC, referring to a crisis in which the Fed would need to step in.

“We don’t want to get there again,” he said. “The more you get to that point repeatedly, the higher the risk that you’re going to cross it.”

The Fed got very close to having to intervene due to market malfunction, says Allianz's Mohamed El-Erian

Finance

How the mother of all ‘short squeezes’ helped drive stocks to historic gains Wednesday

Published

2 hours ago

April 10, 2025

Business Finance News

A trader works on the floor of the New York Stock Exchange during afternoon trading on April 9, 2025 in New York.

Angela Weiss | Afp | Getty Images

A massive number of hedge fund short sellers rushed to close out their positions during Wednesday afternoon’s sudden surge in stocks, turning a stunning rally into one for the history books.

Traders — betting on share price declines — had piled on a record number of short bets against the U.S. stocks ahead of Wednesday as President Donald Trump initially rolled out steeper-than-expected tariffs.

In order to sell short, hedge funds borrow the security they’re betting against from a bank and sell it. Then as the security decreases in price from where they sold it, they buy it back more cheaply and return it to the bank, profiting from the difference.

But sometimes that can backfire.

As stocks soared on news of the tariff pause, hedge funds were forced to buy back their borrowed stocks rapidly in order to limit their losses, a Wall Street phenomenon known as a short squeeze. With this artificial buying force pushing it higher, the S&P 500 ended up with its third-biggest gain since World War II.

Coming into Wednesday, short positioning was almost twice as much as the size seen in the first quarter of 2020 amid the onset of the Covid pandemic, according to Bank of America. As funds ran to cover, a basket of the most shorted stocks surged by 12.5% Wednesday, according to Goldman Sachs, pulling off a larger jump than the S&P 500‘s 9.5% gain.

And a whopping 30 billion shares traded on U.S. exchanges during the session, marking the heaviest volume day on record, according to Nasdaq and FactSet data going back 18 years.

“You can’t catch a move. When you see someone short covering, the exit doors become so small because of these crowded trades,” said Jeff Kilburg, KKM Financial CEO and CIO. “We live in a world where there’s more and more twitchiness to the marketplace, there’s more and more paranoia.”

S&P 500

Of course, there were real buyers too. Long-only funds bought a record amount of tech stocks during the session, especially the last three hours of the day, according to data from Bank of America.

But traders credit the shorts running for cover for the magnitude of the move.

“The pain on the short side is palpable; the whipsaw we have witnessed the past few weeks is extreme,” Oppenheimer’s trading desk said in a note. “What we saw in tech on that rise was obviously covering but more so real buyers adding on to higher quality semis.”

Thin liquidity also played a role in Wednesday’s monster moves. The size of stock futures (CME E-Mini S&P 500 Futures) one can trade with the click of your mouse dropped to an all-time low of $2 million on Monday, according to Goldman Sachs data. Drastically thin markets tends to fuel outsized price swings.

Markets were pulling back Thursday as investors realized the economy is still in danger from super-high China tariffs and the uncertainty that daily negotiations with other countries will bring over the next three months.

There are still big short positions left in the market, traders said.

That could fuel things again, if the market starts to rally again.

“The desk view is that short covering is far from over,” Bank of America’s trading desk said in a note. “Our reasoning is that the market can’t de-risk a short in less than 3 hours which provided 20%+ SPX Index downside & major reduction in NET LEVERAGE over 7 seven weeks.”

“No shot it cleared in less than 3 hours,” Bank of America said.