Personal loans are a versatile financial tool that can help you achieve various goals, from consolidating debt to funding home improvements or covering unexpected expenses. However, finding a personal loan with low-interest rates can be challenging. In this guide, we’ll reveal the best personal loans with low-interest rates, helping you make an informed decision and save money in the long run.
Understanding Personal Loans
Before diving into the best options, it’s essential to understand what a personal loan is. A personal loan is a type of unsecured loan offered by banks, credit unions, and online lenders. Unlike secured loans, personal loans do not require collateral, making them accessible to many borrowers. The interest rates on personal loans can vary widely based on factors such as credit score, income, and loan amount.
Why Interest Rates Matter
The interest rate on your personal loan determines how much you’ll pay in interest over the life of the loan. A lower interest rate means lower monthly payments and less interest paid overall. Therefore, securing a low-interest rate is crucial to saving money and making your loan more affordable.
Top Personal Loans with Low-Interest Rates
Here are some of the best personal loans with low-interest rates currently available:
1. LightStream
Interest Rates: 5.95% to 19.99% APR (with AutoPay)
LightStream, a division of SunTrust Bank, offers some of the lowest interest rates in the personal loan market. They provide loans for various purposes, including home improvement, debt consolidation, and major purchases. LightStream’s low rates are available to borrowers with excellent credit, and they also offer a Rate Beat Program, promising to beat any qualifying rate from another lender by 0.10 percentage points.
2. SoFi
Interest Rates: 6.99% to 21.78% APR (with AutoPay)
SoFi is known for its competitive rates and excellent customer service. They offer personal loans for debt consolidation, home improvements, and other needs. SoFi provides an unemployment protection program, which temporarily pauses your payments if you lose your job. Additionally, SoFi members gain access to career coaching and financial planning resources.
3. Marcus by Goldman Sachs
Interest Rates: 6.99% to 24.99% APR
Marcus by Goldman Sachs offers no-fee personal loans with competitive rates. There are no origination fees, late fees, or prepayment penalties, making it a cost-effective option for borrowers. Marcus also provides a unique feature where you can defer a payment after making 12 consecutive on-time payments, offering flexibility during tough times.
4. Discover Personal Loans
Interest Rates: 6.99% to 24.99% APR
Discover Personal Loans offer low-interest rates and no origination fees. They provide loans for debt consolidation, home improvements, and other purposes. Discover allows you to check your rate without affecting your credit score, making it easy to compare options. They also offer a 30-day money-back guarantee, letting you return the loan funds within 30 days without any interest charges.
5. Payoff
Interest Rates: 5.99% to 24.99% APR
Payoff specializes in personal loans for credit card consolidation, offering competitive rates and excellent customer service. Their loans come with no hidden fees, and they provide tools to help you track your financial progress. Payoff also offers free monthly FICO score updates, so you can monitor your credit improvement.
6. Upgrade
Interest Rates: 8.49% to 35.99% APR (with AutoPay)
Upgrade offers personal loans with competitive rates for borrowers with good to excellent credit. They provide loans for debt consolidation, home improvements, and major purchases. Upgrade offers a unique feature called Credit Health, which provides free credit monitoring and educational resources to help you improve your credit score.
7. Avant
Interest Rates: 9.95% to 35.99% APR
Avant caters to borrowers with fair to good credit, offering personal loans with reasonable rates. While their interest rates are higher than some other lenders, Avant provides fast funding and flexible repayment options. They also offer tools to help you manage your loan and budget effectively.
Also Read: 10 Tips to Get the Best Car Insurance Quotes in 2024
Tips for Securing a Low-Interest Personal Loan
Securing a low-interest personal loan requires some preparation and research. Here are some tips to help you get the best rate:
1. Check Your Credit Score
Your credit score plays a significant role in determining your interest rate. Before applying for a loan, check your credit score and address any errors or issues. Improving your credit score can help you qualify for lower rates.
2. Compare Multiple Lenders
Don’t settle for the first offer you receive. Compare rates from multiple lenders to find the best deal. Many lenders offer prequalification, allowing you to check your rate without affecting your credit score.
3. Consider Loan Terms
Shorter loan terms typically come with lower interest rates. If you can afford higher monthly payments, opting for a shorter term can save you money in interest.
4. Use a Co-Signer
If you have a co-signer with excellent credit, you may qualify for a lower interest rate. Ensure your co-signer understands their responsibility, as they will be liable for the loan if you default.
5. Opt for AutoPay
Many lenders offer a rate discount if you set up automatic payments. Enrolling in AutoPay can save you money and ensure you never miss a payment.
6. Improve Your Financial Profile
Lenders consider your income and debt-to-income ratio when determining your rate. Paying down debt and increasing your income can help you qualify for a lower interest rate.
Bottom Line
Finding the best personal loans with low-interest rates can save you significant money over the life of your loan. By understanding your options and following the tips above, you can secure a loan that meets your needs without breaking the bank. Remember to compare multiple lenders, check your credit score, and consider factors like loan terms and co-signers to get the best rate possible.
