- Compare personal loans by APR, not the interest rate alone. APR includes fees such as an origination fee.
- Your credit score is the biggest driver of the rate you are offered. Rates for fair credit can be roughly double those for excellent credit.
- Prequalify with at least three lenders. Prequalification typically uses a soft credit check that does not affect your score.
- FairRate Today only covers personal loans with a maximum APR below 36% and terms longer than 60 days.
A personal loan is a lump sum you borrow from a bank, credit union or online lender and repay in fixed monthly installments, usually over two to seven years. Most personal loans are unsecured, which means you don’t put up collateral like a car or house. That makes them a flexible way to consolidate high-interest debt, cover a large expense, or pay for a home project, but the cost varies widely from lender to lender and from borrower to borrower.
This guide explains how to compare lenders so the “best” personal loan is the one that is cheapest and safest for you, not the one with the lowest advertised rate.
Personal loan rates right now
Two benchmarks help you judge whether an offer is reasonable:
- The Federal Reserve reported an average rate of 11.90% on 24-month personal loans at commercial banks for August 2026 (FRED series TERMCBPER24NS). Banks tend to lend mostly to borrowers with strong credit, so this is a “good credit” benchmark.
- Rates offered through online marketplaces vary much more by credit score. NerdWallet’s prequalification data, updated November 2, 2026, showed these estimated average APRs:
| Credit tier | Score range | Estimated average APR |
|---|---|---|
| Excellent | 720–850 | 15.10% |
| Good | 690–719 | 19.49% |
| Fair | 630–689 | 27.38% |
| Bad | 300–629 | 44.02% |
Notice the average for bad credit is above 36%. Loans at that price can be very hard to repay, which is why we do not list them. If your score is below 630, read our guide to personal loans for bad credit under 36% APR before you apply anywhere.
What it actually costs: a worked example
Representative example: Borrow $10,000 for 36 months at a 15.00% APR. Your monthly payment would be about $346.65, you would pay about $2,479.52 in interest, and the total repaid would be about $12,479.52. If the loan has an origination fee deducted from the proceeds, you would receive less than $10,000 but still repay the full amount.
The same $10,000 over 36 months costs very different amounts depending on the APR:
| APR | Monthly payment | Total interest | Total repaid |
|---|---|---|---|
| 8.00% | $313.36 | $1,281.09 | $11,281.09 |
| 15.00% | $346.65 | $2,479.52 | $12,479.52 |
| 25.00% | $397.60 | $4,313.54 | $14,313.54 |
| 35.99% | $457.98 | $6,487.32 | $16,487.32 |
Stretching the same loan to 60 months at 15% lowers the payment to about $237.90 but raises total interest to about $4,273.96. A longer term makes a loan easier to afford each month and more expensive overall. Test your own numbers with our personal loan calculator.
How to compare personal loan lenders
1. APR range and where you will land in it
Lenders advertise a range, such as 8% to 35.99%. Only applicants with the strongest credit get the bottom of the range. Prequalification shows you a personalized estimate, which is the only number worth comparing.
2. Origination fee
Many lenders charge a one-time fee, usually a percentage of the loan, deducted before you receive the money. A 5% fee on $10,000 means you receive $9,500. If you need the full $10,000 in hand, you would have to borrow more. Lenders with no origination fee can be cheaper even with a slightly higher interest rate, which is why APR is the better comparison number. Our guide to APR vs interest rate explains the difference.
3. Repayment terms
Choose the shortest term with a payment you can comfortably afford. Check whether the lender charges a prepayment penalty; most reputable personal loan lenders do not.
4. Eligibility rules
Look at minimum credit score, minimum income, maximum debt-to-income ratio, and whether a co-signer or joint applicant is allowed. A co-borrower with stronger credit can lower your rate.
5. Features that matter for your purpose
- Debt consolidation: direct payment to your creditors, so the money goes straight to the cards you are paying off. See debt consolidation loans.
- Emergencies and repairs: fast funding, sometimes the next business day after approval.
- Home projects: larger loan amounts and longer terms. See home improvement loans.
6. Support if things go wrong
Ask whether the lender offers hardship options such as a temporary payment reduction, and whether you can change your due date.
Find the right guide for your credit
- Personal loans for excellent credit (720+)
- Personal loans for good credit (690–719)
- Personal loans for fair credit (630–689)
- Personal loans for bad credit, under 36% APR
When a personal loan is not the best choice
- You can pay the expense from savings within a few months without hardship.
- You qualify for a 0% intro APR balance transfer card and can repay the balance before the promotion ends.
- You are borrowing to cover ongoing monthly shortfalls. A loan will not fix a budget gap and can make it worse. A nonprofit credit counselor can help.
- The only offers you receive are 36% APR or higher.
Personal loan red flags
- “Guaranteed approval” or “no credit check” promises
- Upfront fees charged before you receive the loan (legitimate origination fees are deducted from the proceeds, not paid in advance)
- Pressure to sign immediately, or a lender that won’t show the APR before you accept
- A lender that isn’t registered in your state. You can check with your state’s financial regulator.
Frequently asked questions
What is a good APR on a personal loan?
It depends on your credit. Borrowers with excellent credit can see offers in the single digits or low teens, while fair-credit borrowers often see rates in the 20s. As a benchmark, the Federal Reserve reported an average 11.90% rate on 24-month personal loans at commercial banks for August 2026.
Does checking personal loan rates hurt my credit?
Prequalifying usually uses a soft credit inquiry, which does not affect your credit score. A hard inquiry happens only when you submit a full application. Learn more in how to prequalify without hurting your credit.
How many personal loan offers should I compare?
Aim to prequalify with at least three lenders so you can compare APR, origination fee, monthly payment and total cost side by side.