What A Low-Interest Personal Loan Is & Where To Get One

A low-interest personal loan has an interest rate under the current market average of 12.65 percent, as of June 7, 2025. To qualify, you will need excellent credit and a higher income. Before you fully apply, compare low-interest personal loan rates to see which lenders will give you the most competitive offer.

What is considered a low interest rate for a personal loan?

An interest rate below 10 percent is typically considered low in the personal loan world. However, top lenders like Upstart and LightStream have a starting annual percentage rate (APR) under 7 percent. Provided you have excellent credit and a strong income, you may be able to qualify for a low-interest personal loan with sub-10 percent interest rate if you have excellent credit, stable income and can afford a shorter term. 

Although personal loan rates rise and fall to a small degree alongside the federal funds rate, your credit score has the most impact on the rate a lender offers you. The average personal loan interest rate has steadily increased over the last year, while minimum rates have dropped below 7 percent at several lenders. 

Some lenders may specialize in offering lower rates for specific credit tiers. For example, one lender might offer you 20 percent for fair credit, while another offers 18 percent. While those rates are much higher than excellent credit APRs, they would be considered “low” within the fair credit score range. 

Your loan term is also a factor in how low your APR is. Lenders typically charge higher APRs for longer terms of five years or more. 

Impact of fees and discounts on APR

Watch how fees affect your APR. Getting a low interest rate offer may not be such a good deal if it comes with high fees. Ask about autopay discounts and any other incentives, especially if you apply with a bank or credit union. You may be eligible for more discounts than you realize, which could result in significant interest savings over the term of your loan. 

Where to get a low-interest personal loan

Not all lenders offer low-interest loans. You can typically find the most competitive low rates with online lenders, banks and credit unions. It’s best to shop at least three lenders to make sure you’re getting the best deal. 

You may also want to get prequalified through a marketplace matching site, like Bankrate. The rate pages provide expert-vetted information about several featured lenders, and with one application you can get several prequalified offers. 

Online lenders

Online lenders may offer quick digital applications and funding within one business day for qualified borrowers. You may notice much higher APR ranges — as high as 35.99 percent — which means their products may be tailored more for fair or bad credit borrowers. 

Watch out for fees as well, which can be as high as 12 percent at some online lenders. Check also to see if there are any restrictions on what you can use the funds for such as home improvement. 

Banks

Banks often advertise some of the lowest rates for personal loans, if they offer them. Those that do may offer a relationship discount if you already have a checking or savings account. The lowest rates typically require very high credit scores and terms of more than three years. 

Both local and national banks offer low rates to customers with excellent credit, and qualifying standards may be more stringent than online lenders. They typically don’t charge any origination fees, which means you take home the full amount you borrow without any deductions. 

Credit unions

Credit unions are owned by their members, so many can offer low rates with less strict eligibility criteria. Unfortunately, it also means you must qualify for membership, and may be subject to a waiting period before you can apply for a loan.

Overall, credit unions will likely offer rates similar to those of banks and online lenders. The major difference is for borrowers who need a fair credit loan with a good rate. If you qualify, you could borrow a small personal loan that has its rate capped at 18 percent — which is much lower than lenders that have a maximum APR stretching up to almost 36 percent.

Marketplace matching sites

Bankrate is an example of a marketplace matching site. You can check out details on several different lenders with all of the basic information about fees, APR ranges, minimum credit score and available terms in one place. 

That could save you time versus trying to find all of that information in the small print sections of online lender, bank and credit union pages. With one application, you can get several offers.

How to get a low personal loan rate

To qualify for a low-interest personal loan, you will need excellent credit, strong income and a low debt-to-income (DTI) ratio.

• Pay off debts. If your DTI is high, lenders will be less likely to offer you a loan. Not only will paying off your debts help you score a lower rate, but it may also improve your credit score by lowering your credit utilization ratio.
• Improve your credit score. Lenders will only offer their lowest rates to borrowers with good to excellent credit. By increasing your credit score, you give yourself an edge when searching for a low interest rate.
• Compare lenders. Although you may not be able to qualify for the lowest interest rates on the market, you can still find a lender with low rates for your credit bracket. Compare lenders to see which ones offer the best terms, lowest fees and other features that matter to you.
• Apply for prequalification. Most lenders will offer a prequalification process on their personal loans. This allows you to preview your rates and see what you might qualify for.
• Choose a shorter repayment period. Your lender may choose to offer more competitive rates if you opt for shorter repayment periods — usually less than 48 months.
• Find a cosigner. A well-qualified cosigner or a co-borrower may be helpful if you don’t qualify for the lowest rates on your own. Lenders may be willing to quote you a lower rate if another person shares responsibility for the loan.
• Use collateral. A secured loan may help you qualify for lower rates. However, many personal loans are unsecured — which makes finding secured loans difficult.

Eligibility criteria for low-interest personal loans

Before you apply for any type of loan, check the lender’s website for any specific requirements. Lenders that offer low-interest loans may:

• Set higher income limits. You may have to document a certain income even if your credit scores are very high.
• Require lower debt limits. Lenders may set a lower DTI limit for low-interest loans to ensure that you can repay the loan easily. 
• Restrict how you can use the money. Low-interest loans may be earmarked for home improvement or debt consolidation.
• Limit co-borrower or cosigning options. You’re less likely to be able to add someone else to the loan to qualify for a higher amount at low-interest lenders. 

Bottom line

Low-interest personal loans can be a great tool to pay less than you borrow. Ultimately, a high credit score and income will give you access to the lowest rates. If you can afford a short term, you could even snag one of those “as-low-as” rates. Always compare low-interest loan options to find the best fit for your budget. Limit your choices to lenders that offer prequalification to avoid any damage to your credit score.