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 12.58 percent, as of May 21, 2025. To qualify, you will need excellent credit and a higher income. Before you fully apply, compare 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?

Top lenders like Upstart and LightStream have a starting annual percentage rate (APR) under 8 percent. Provided you have excellent credit and a strong income, you may be able to qualify for a low-interest personal loan with an APR under 10 percent.

Rates typically rise and fall to a degree alongside the federal funds rate, which determines how pricey it is for banks to lend to each other. Because the average personal loan interest rate has increased over the last year, even borrowers with good credit could still face rates over 10 percent. You are unlikely to find any lender offering an APR under 7 percent.

This also affects what lenders and borrowers consider a low rate. While it won’t be as low as it might have been a few years ago, it can still be competitive compared to the market.

Where to get a low-interest personal loan

Low-interest personal loans are just like any other loan. They just cost less. You can find competitive low rates with online lenders, banks and credit unions. However, you may need to meet additional requirements to score the lowest rate available.

Online lenders

Online lenders may offer low rates and quick applications. In many cases, you can apply for a loan and, if approved, receive your funds within a week. This makes them quick, but many reserve their lowest rates for borrowers with extremely strong credit profiles.

If you score the minimum APR offered, you will usually need to sign up for automatic payments to get the lowest interest rate advertised on the lender’s website.

Banks

Not every bank has personal loans. Those that do may offer a relationship discount if you already have a checking or savings account. As with online lenders, you may need to sign up for automatic payments from that account to get a discounted APR.

Both local and national banks offer low rates to customers with excellent credit because of their financial backing, which makes them a good place to look first if you don’t want to send out a dozen applications.

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 have an account to qualify for a personal 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 36 percent.

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 co-signer. A well-qualified co-signer 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.

Bottom line

When it comes to paying less for what you borrow, low-interest personal loans can be key. Ultimately, a high credit score and income will give you access to the lowest rates.

If you already qualify with top lenders, compare low-interest loan options to find the best fit for your budget. If you don’t yet qualify, take time to build your credit score before applying.