Best Personal Loan Rates of July 2026
What Can You Use a Personal Loan For?
Like a credit card, a personal loan can finance virtually anything. Here are some common uses for personal loans:
- Debt consolidation. Personal loans are often used to pay off high-interest credit card debt at a lower rate with fixed monthly payments.
- Home improvements. Unlike home equity financing, personal loans are unsecured. You don’t have to use your home as collateral – and risk losing the roof over your head if you can’t pay.
- Emergency expenses, such as unexpected car repairs, veterinary bills or HVAC replacement. Personal loan funding is fast, with some lenders offering same-day loans.
- Large purchases. A personal loan can help you pay for big-ticket items like appliances in smaller monthly installments over a set period of time.
- Elective medical procedures. You might use a personal loan to pay for medical services not covered by health insurance, such as cosmetic surgery or dental work.
However, there are exceptions. You can’t use a personal loan to pay for college tuition, business expenses or a down payment on a home. And just because you can use a personal loan to cover discretionary expenses, like a wedding or even a luxury handbag, doesn’t mean you should. Be sure to compare your financing options, including simply saving up in advance.
It’s a good idea to compare rates and terms with multiple personal loan providers to make sure you’re getting the best deal for your situation. Most lenders let you prequalify to see your estimated interest rate and terms with a soft credit inquiry, which won’t impact your credit score.
You’ll want to consider a number of factors when choosing the best personal loan lender:
- Interest rate. The lower your personal loan rate, the less you’ll pay to borrow. Having a high credit score unlocks the best personal loan interest rates, while bad credit will make borrowing more expensive. Rates vary among lenders, so research your options.
- Fees. Many lenders charge an origination fee from 1% to 10% of the loan amount. Because this greatly affects the payout you receive, be sure to note this and any other lender charges. Compare overall costs using the loan’s APR, which includes the interest rate as well as origination fees and other charges.
- Loan amount. Many lenders have minimum and maximum loan amounts, so it’s worth noting before applying for a personal loan. If a lender’s maximum is $25,000, don’t waste your time trying to borrow $40,000. You also don’t want to overextend yourself if a lender’s minimum loan amount is $5,000, but you only need to borrow a small amount.
- Repayment terms. Longer repayment periods mean lower monthly payments but higher overall costs, while shorter terms come with higher payments but save you money in the long run. Play with these factors when you calculate your monthly payment to make sure you can afford it.
- Customer service. Check online reviews on sites such as the Better Business Bureau, Trustpilot or the Consumer Financial Protection Bureau. If the lender is a financial institution, you might reach out to family and friends about their experience.
“When shopping around for the lowest rate, prequalify with a solid mix of banks, online lenders and credit unions. Rates can vary significantly for the same borrower, and even a difference of a few percentage points can save you quite a bit of money over the life of the loan.”
As of July 2026, the average personal loan interest rate is 11.86% for a 24-month term length, according to the Federal Reserve. Personal loan rates range from about 6% to 36%, depending on several factors: the borrower’s credit score and income, the loan amount, loan length, loan purpose, and the type of interest, fixed or variable.
Personal loan rates vary widely based on lender pricing policy and borrower creditworthiness. Applicants with very good or excellent credit scores will be offered much lower interest rates than those with fair or poor credit. Often, borrowers with bad credit apply for a secured personal loan that uses an asset as collateral, or they enlist the help of a creditworthy cosigner in order to achieve lower rates.
| Credit Score | Median Personal Loan APR |
| 300-579 | 25.82% |
| 580-669 | 25.51% |
| 670-739 | 19% |
| 740-799 | 14.4% |
| 800-850 | 12.87% |
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Source: Experian, May 2026 |
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The Federal Reserve’s policy doesn’t have an outsized impact on interest rates for personal loans. To a much greater extent, lenders determine personal loan rates based on an applicant’s risk, charging higher rates for those with low credit scores – and vice versa. That said, minimum personal loan rates do tend to track the federal funds rate.
Borrowers with a variable-rate personal loan or line of credit may see their rate (and monthly payment) rise or fall when the Fed hikes or cuts rates, much like a variable annual percentage rate credit card. However, most personal loans come with fixed interest rates, so borrowers who have them won’t be impacted by rate hikes or cuts.
Pros
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Depending on the lender, you can potentially receive funds for personal loans in as little as one business day.
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Personal loans can help you consolidate high-interest credit card debt and pay it off faster at a lower interest rate.
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Personal loans are delivered as a lump sum that can be used as you see fit.
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Personal loans are typically unsecured, so you don’t have to use collateral.
Cons
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Depending on the lender, you may have to pay origination fees or even prepayment penalties.
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A personal loan may have a higher APR than other options, such as a 0% credit card or a home equity loan, depending on creditworthiness and other factors.
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Personal loans may be difficult to obtain if you have fair or bad credit.
1. Get prequalified. Most – but not all – personal loan companies let you see your estimated interest rate with a soft credit inquiry, which won’t impact your credit score. When you request a rate quote, you’ll provide personal information, including your address, income and Social Security number, on the lender’s secure website. You’ll indicate the amount you want to borrow, the reason for borrowing and the repayment term length you prefer.
Once you give these details, you’ll be informed of rates and how to formally apply for a loan. However, prequalification doesn’t necessarily guarantee your loan application will be approved.
2. Compare offers. Research different lenders to find the best personal loan interest rate. Consider factors such as loan origination fees, the monthly payment, repayment terms and customer service.
3. Formally apply through the lender of your choice. You’ll complete your loan application, which will trigger a hard credit inquiry on your credit report. Keep in mind that even with good credit, you won’t be guaranteed approval or a particular interest rate.
Congratulations, you’ve been approved for a personal loan and received the funds you need! Now, your responsible repayment journey begins.
It’s important to make on-time monthly payments to avoid late fees, penalty APRs and negative marks on your credit report. You can set up automatic payments to avoid missing your due date – some lenders will even offer an APR discount if you enroll in auto pay.
You might also decide to make extra payments toward your personal loan to save money on interest and get out of debt faster. Consider using cash windfalls, such as tax refunds and work bonuses, toward paying down the principal balance of your loan.
However, some lenders charge a prepayment penalty for paying off the loan early. If there is a prepayment penalty, do some math to determine if the fee is offset by your potential interest savings.
A personal loan is an installment loan that you repay in fixed monthly payments over a set period of months or years. This differs from a credit card or revolving line of credit that has variable rates and payments.
Personal loans are usually unsecured, which means they are supported by your creditworthiness rather than an asset used as collateral. Those with good to excellent credit have the best chance of qualifying for an unsecured loan, while those with bad credit have a harder time getting a traditional personal loan.
A personal loan might make sense in certain situations, like if you want to consolidate some of your higher-interest debts, pay for home improvements or cover an emergency expense. Compared with credit cards, personal loans may offer lower APRs than credit cards if you need to, say, cover an unexpected vet bill.
Getting a personal loan isn’t always a good idea, though. While personal loans can be used for home remodeling, you may instead want to consider a home equity loan at a lower interest rate (plus added tax benefits) if you don’t mind using your house as collateral. And for some types of special purchases, such as a wedding or a vacation, it’s best to plan and save so you can pay cash rather than take out a personal loan.
It’s more difficult to qualify for a personal loan if you have a low or no credit, although some lenders do specialize in personal loans for bad credit. These are usually secured personal loans backed by collateral like a savings account or certificate of deposit. However, subprime borrowers can expect to pay much higher interest rates, making the loan more expensive to repay over time. Enlisting the help of a creditworthy cosigner is another option for applicants with limited credit.
Personal loan interest rates typically range from about 6% to 36%, depending on creditworthiness and other factors. Generally, the higher your credit score, the better your personal loan interest rate.
Also, the higher your credit score, the greater choice of personal loans you’ll have with favorable terms. Companies want to work with people who have good or excellent credit scores and are more likely to offer personal loans with better terms to these consumers.
“Realistically, you probably need a credit score of 680 to 700 or higher” to qualify for a personal loan, says Joseph Carbone, certified financial planner and founder of financial planning firm Focus Planning Group. “If you are in a range of 620 to 680, you might need a cosigner to secure the line.”
- Make a payment arrangement. To finance medical expenses, always attempt a payment arrangement with the provider before taking out a personal loan. The same goes for utility providers like electricity or water companies.
- Look at other types of loans. A home equity loan or line of credit could be an option for home repairs and an auto loan for a new or used car purchase. Compare other types of loans and their terms to see if they offer a better rate.
- Consider using a low-interest credit card. If your expense or purchase can be paid with a credit card with a zero-interest promotional period, consider that first. But be sure that you can repay the balance in a reasonable time frame to avoid accruing high-interest, revolving debt.
- Borrow from a family member. Asking for help may be difficult, but if someone is in a position to loan you money, then it may be better than a personal loan. It’s up to you to weigh the pros and cons of borrowing from friends or family.
Lenders consider your credit report and score, as well as your income and debt-to-income ratio, or DTI, to determine if you meet their minimum requirements for a personal loan.
Generally, you’ll need a credit score in the high 600s to qualify for a personal loan, but having very good or excellent credit improves your chances of qualifying for the best possible terms. Personal loan lenders like to see a DTI ratio under 36% when considering applications. Some personal loan providers, however, are willing to approve applicants with DTI as high as 50%.
Most personal loan providers don’t set a minimum income, but some do. And you need to demonstrate a stable employment history with W-2s and pay stubs. Self-employed applicants generally need two years of tax returns and financial statements. If you’re furloughed or unemployed, the lender may ask for documentation that indicates when you’ll return to work, such as your furlough letter or a job offer.
Age eligibility requirements can vary by lender or by state and territory laws. Generally, consumers must be 18 to apply, but some states require borrowers to be 19 or 21.
If you’re applying for a secured personal loan, the lender will also consider your collateral. You’ll need to establish its value and prove that you own it.
Personal loans are available from brick-and-mortar banks, credit unions and online lenders. The best place to get a loan will depend on your unique financial situation:
- Banks offer personal service, especially if a location is nearby. You could also check whether your bank offers a relationship discount on personal loans if you already have a checking or savings account there.
- Credit unions offer competitive terms since they’re nonprofit and member-owned. Federally chartered credit unions have interest rate caps of 18% on all loans, including personal loans, and may charge lower fees than for-profit banks.
- Online lenders are best for convenience, especially if you prefer to apply, manage and close personal loans online. However, most banks and credit unions have the same online tools as any other lender.
