Personal loan interest rates plummet for 3- and 5-year fixed-rate loans

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The latest trends in interest rates for personal loans from the Credible market, updated weekly. (iStock)

Borrowers with good credit standing personal loans in the past seven days pre-qualified for rates that were lower for 3- and 5-year fixed rate loans compared to the previous seven days.

For borrowers with credit scores of 720 or higher who used the Credible marketplace to choose a lender between November 3 and November 9:

  • Rates on 3-year fixed rate loans averaged 12.36%, down from 13.52% in the previous seven days and up from 10.88% a year ago.
  • Rates on 5-year fixed rate loans averaged 15.93%, down from 16.54% in the previous seven days and up from 14.19% a year ago.

Personal loans have become a popular way to Consolidate and pay off credit card debt and other loans. They can also be used to cover unexpected expenses such as medical billstake care of a large purchase or finance home improvement projects.

Interest rates on personal loans have fallen significantly over the past seven days for 3-year and 5-year fixed rate loans. Rates on 5-year loans fell by 0.61 percentage points, while 3-year loans fell by a further 1.16 percentage points. Despite today’s reductions, interest rates for both loan terms are higher than they were this time last year. Still, borrowers can take advantage of interest savings with a 3 or 5 year personal loan right now. Both term loans offer significantly lower interest rates than higher cost borrowing options such as credit cards.

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Whether a personal loan is right for you often depends on many factors, including what rate you can qualify for. Comparing multiple lenders and their rates can help ensure that you get the best possible personal loan for your needs.

It’s always a good idea comparison shop on sites like Credible to understand how much you qualify for and choose the best option for you.

Here are the latest trends in personal loan interest rates from the Credible market, updated monthly.

Weekly personal loan rate trends

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The chart above shows average pre-qualified rates for borrowers with credit scores of 720 or higher who used the credit market to select a lender.

For October 2022:

  • Rates on 3-year personal loans averaged 12.37%, up from 11.65% in September.
  • Rates on 5-year personal loans averaged 15.84%, up from 15.60% in September.

Rates on personal loans vary greatly by credit score and loan term. If you are curious about the types of personal loan rates you may be eligible for, you can use an online tool like Credible to compare options from different private lenders. Checking your rates will not affect your credit score.

All credit market lenders offer fixed rate loans at competitive rates. Because lenders use different methods to evaluate borrowers, it’s a good idea to ask for personal loan rates from multiple lenders so you can compare your options.

Current personal loan rates by credit score

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In October, the average pre-qualified rate chosen by borrowers was:

  • 9.90% of borrowers with credit scores of 780 or higher who choose a 3-year loan
  • 29.90% of borrowers with credit scores below 600 choose a 5 year loan
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Depending on factors such as your credit score, the type of personal loan you are seeking and the repayment term of the loan, the interest rate may be different.

As shown in the chart above, a good credit score can mean a lower interest rate, while loans with fixed interest rates and longer repayment terms tend to have higher rates.

How to get a lower interest rate

Many factors affect the interest rate a lender may offer you on a personal loan. But you can take some steps to increase 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 includes:

  • 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 make sure there are no errors. If you find errors, dispute them with the credit bureau.
  • Lower your credit utilization ratio. This important credit scoring factor can be improved by paying off credit card debt.
  • Avoid opening new credit accounts. Apply and open credit accounts you really need. Too many hard inquiries on your credit report in a short period of time can lower your credit score.

Choose a shorter loan term

Personal loan repayment terms can vary from one year 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.

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If your financial situation allows, applying for a shorter term may help you score a lower interest rate. Remember that 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, find a cosigner good credit may help you get a lower interest rate.

Remember, if you default on the loan, your cosigner will be on the hook for repayment. And co-signing on a loan could also affect their credit score.

Compare rates from different lenders

Before you apply 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 tend to offer the most competitive rates – and can pay off your loan faster than a brick and mortar establishment.

But don’t worry, comparing rates and terms doesn’t have to be a time-consuming process.

Believable makes it easy. Enter how much you want to borrow and you’ll be able to compare multiple lenders choose the one that makes the most sense to you.

About Credible

Credible is a multi-lender marketplace that enables consumers to find financial products that best suit their unique circumstances. Credible’s integration with leading lenders and credit bureaus enables consumers to quickly compare accurate, personalized loan options – without compromising their personal information or affecting their credit score. The credible market provides an unparalleled customer experience, as demonstrated by more 4,500 positive Trustpilot reviews and a TrustScore of 4.7/5.

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