Finance

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

Published

8 months ago

April 15, 2024

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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-year loans and lower for 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 April 8 and April 15:

Rates on 3-year fixed-rate loans averaged 15.04%, down from 15.52% the seven days before and up from 14.51% a year ago.
Rates on 5-year fixed-rate loans averaged 20.28%, down from 21.04% the previous seven days and up from 17.29% 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 decreased over the last seven days for 3- and 5-year loans. While 3-year loan rates fell by 0.48 percentage points, rates on 5-year loans fell by 0.76 percentage points. Interest rates for both terms remain significantly higher than they were this time last year, up 0.53 percentage points for 3-year terms and up 2.99 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 March 2024:

Rates on 3-year personal loans averaged 22.22%, up from 21.68% in February.
Rates on 5-year personal loans averaged 24.38%, down from 24.88% in February.

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 March, the average prequalified rate selected by borrowers was:

12.58% for borrowers with credit scores of 780 or above choosing a 3-year loan
31.39% 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.

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 6,500 positive Trustpilot reviews and a TrustScore of 4.7/5.

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The Federal Reserve just announced a third rate cut; fewer are expected in 2025

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Rates were cut by a quarter of a percentage point. (iStock )

The Federal Reserve just cut interest rates one more time this year. In their recent meeting, the Fed decided to cut rates by a quarter of a percentage point, dropping rates to 4.25% to 4.5%. This move was largely expected by economists.

The Fed cited indicators of an expanding economy and an easing labor market after its other rate cuts. This is the third time rates have been cut this year, but economists don’t expect as many cuts in 2025.

“The median member now expects that there will only be two cuts in 2025 and that the federal funds target will be 3% in the long run,” MBA Senior Vice President and Chief Economist Mike Fratantoni said in a statement. “MBA forecasts that the federal funds rate will only drop to 3.75% this cycle.”

The unemployment rate also remains low, and inflation is making slow but steady progress towards the committee’s 2% goal, both factors that created a bottleneck in the final decision to cut rates.

“While the unemployment rate has increased over the past year, and inflation has trended down, in recent months, inflation has plateaued,” Fratantoni said. “It was not surprising to see a dissent at this meeting, with one member voting to keep rates steady.”

With the latest rate cut, The Federal Reserve hopes to inch closer to their inflation growth and ease the unemployment rate.

Worried about the state of the economy? You could consider paying down high-interest debt with a personal loan at a lower interest rate. Visit Credible to speak with a personal loan expert and get your questions answered.

INFLATION SEES THE LOWEST ANNUAL RISE SINCE 2021

Home sales likely to increase in 2025

The housing market has faced a roller coaster of a year, but certain aspects are expected to raise home sales in 2025. Real estate experts predict a slow thaw for mortgage rates, giving prospective buyers who have been priced out of the market in recent years more wiggle room.

Many housing market measures are trending closer to historical norms, showing signs of an improved market in the new year. Listings are still lower than before the pandemic, but there are significantly more than in March, when there was a 25% deficit, according to Zillow.

Buyers shouldn’t expect an entirely smooth path when buying in 2025, however. For many, 2025 looks eerily similar to the volatile market of 2024.

“There’s a strong sense of déjà vu on tap for 2025. We are once again expecting mortgage rates to get better gradually, and opportunities for buyers should follow, but be prepared for plenty of bumps on that path,” Zillow Chief Economist Skylar Olsen said.

Shoppers looking to move in the slower winter months have an advantage. Sellers who have been waiting for rates to drop may be looking to unload their homes while interest rates are on the decline.

“Those shopping this winter have plenty of time to choose and a relatively strong position in negotiations,” Olsen said.

If you’re looking to purchase a home, consider visiting Credible to find the best mortgage rate for your financial situation.

THE US ADDED 818,000 FEWER JOBS THIS YEAR THAN ORIGINALLY ESTIMATED

Mortgage rates and home prices expected to fluctuate over the next year

More listings may be on the horizon, but buyers shouldn’t expect rock bottom mortgage rates any time soon. Prices also aren’t set to drop just yet. Prices are expected to grow by 3.7%, Realtor.com recently reported.

Mortgage rates are also expected to remain in the 6% range, with fluctuations over the year, much like 2024. Due to these small improvements, single family home listings are expected to grow by nearly 14%, according to Realtor.com.

Sellers in certain highly desirable areas will still hold the power in 2025. Inventory is improving, but it’s still limited compared to years past. This gives sellers the upper hand when negotiating prices.

How the newest presidential administration will factor in the housing market recovery process is difficult to predict, but there’s a potential for a “Trump Bump”, as Realtor.com calls it.

“While President-elect Trump can work quickly with his administration to implement some regulatory changes, other policies that will affect housing, such as tax changes and broad deregulation, require the cooperation of other branches and levels of government,” Realtor.com Chief Economist Danielle Hale said.

“The size and direction of a Trump bump will depend on what campaign proposals ultimately become policy and when,” Hale said. “For now, we expect a gradual improvement in housing market dynamics powered by broader economic factors. The new administration’s policies have the potential to enhance or hamper the housing recovery, and the details will matter.”

If you think you’re ready to shop around for a home loan, use Credible to help you easily compare interest rates from multiple lenders in minutes.

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