Current average interest rate for personal loans in August 2025
Personal Loan Rates in 2025: A Comprehensive Overview
When it comes to securing a personal loan, understanding the interest rates and fees involved is crucial. Here's a breakdown of the current personal loan landscape, focusing on rates offered by banks, credit unions, and online lenders.
Fees and Interest Rates
One thing to watch out for when dealing with online lenders is the high fees they may charge. These fees can reach as high as 12 percent of your loan amount and are subtracted from any loan proceeds before you receive your money.
Average Rates in 2025
As of July 23, 2025, the average personal loan rate for customers with a 700 FICO score, a $5,000 loan amount, and a three-year repayment term is 12.64 percent, according to Bankrate Monitor. The national average rate for a three-year personal loan at a credit union was 10.75 percent in 2025's first quarter. On the other hand, the average finance rate for personal loans offered by commercial banks is 12.03 percent for a three-year term.
Rates Based on Credit Score and Loan Term
As more and more lenders open up options for fair or even bad credit borrowers, the average personal loan interest rate for borrowers in the U.S. with excellent credit (credit scores 720-850) is approximately 11.8% APR. This rate tends to decrease for shorter loan terms, with borrowers seeing average rates around 11.2% APR for 3-year loans, but rates increasing to about 16.8% APR for 5-year loans.
Competitive Rates from Banks and Credit Unions
Banks may offer more competitive rates for loans secured by a portion of your savings deposits. Some banks and credit unions, such as Navy Federal Credit Union and PenFed Credit Union, offer personal loan interest rates ranging from 8.99% to 18.00% and 8.99% to 17.99% respectively.
Lower Rates from Online Lenders
Some online lenders offer very low rates for borrowers with excellent credit who qualify for a short term (usually three years). For instance, the lowest personal loan rate offered by Bankrate's best personal loan lenders is 6.49 percent from LightStream. Lenders like SoFi and LightStream offer ranges that start lower but can go much higher depending on other factors such as loan amount, term, and borrower profile.
Qualifying for Low Rates
Qualifying for a lender's lowest rate typically requires excellent credit, high income compared to your debt, and opting for a three-year or shorter term. Following standard financial principles like paying bills on time, minimizing your credit card use, and avoiding lenders that charge high fees can help you qualify for low-interest rate personal loans.
Prequalification and Comparison
If you're unsure about what you qualify for, consider getting prequalified offers on a personal loan marketplace site like Bankrate. Comparing the average personal loan rate with the average rate on your credit cards can help determine if a debt consolidation loan is worth it. Try to choose online lenders that don't charge origination fees, if you qualify.
Stay Informed
Remember, lenders change rates frequently based on factors beyond your control. The annual percentage rate (APR) on any personal loan offers you receive reflects the full cost of your loan, including fees. If you see a personal loan rate that helps you meet your financial goals, apply sooner rather than later.
In summary, the typical average personal loan rate for top-tier credit borrowers is near 11.8% APR with variation by lender and loan term, with shorter terms generally yielding lower rates. With a little extra attention, you might end up with a lower rate on your personal loan for home improvement than your neighbor got on his home equity renovation loan.
- While comparing personal loan options, it's beneficial to consider lower rates offered by some online lenders, such as LightStream, which offers a rate of 6.49 percent for borrowers with excellent credit.
- When aiming to secure a personal loan, following standard personal-finance principles like paying bills on time, minimizing credit card use, and avoiding high-fee lenders can help you qualify for competitive interest rates, such as those offered by banks and credit unions like Navy Federal Credit Union and PenFed Credit Union.
