Low rate loans

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Need a personal loan? A low interest rate can help you save big.
Interest is one of the top costs to consider when comparing personal loans. A low rate can mean lower costs, but you’ll likely need good credit to qualify. This guide walks you through how low-interest loans work.
What’s considered a low-interest personal loan?
A low-interest personal loan is a term loan that comes with an interest rate below 12%. It works like any other personal loan: It’s money you borrow to cover an expense, which you pay back plus interest and fees. The main difference is that they tend to cost less than your average personal loan, thanks to the low interest rate.

To qualify for a low-interest loan from most traditional lenders, you typically need to have credit score above 720 and a strong financial history. It also doesn’t help if you need a larger loan amount — lenders can’t make as much profit as they’d like from a $1,000 loan with an interest rate of 4%.

Doesn’t sound like you? You still have low-interest options. Those without excellent credit might want to look at loans secured with collateral or borrow from credit unions or peer-to-peer lenders, which tend to offer lower rates than other direct lenders.


You might have noticed that most lenders advertise annual percentage rates (APR) instead of interest. That’s because APR includes interest and fees, giving you a more accurate idea of how much your loan is going to cost. Many personal loans don’t come with application or origination fees, so in those cases the APR and interest are the same. Otherwise, a loan’s APR is higher than the interest rate.

Even Financial personal loans

Even Financial is an online connection service that works with a network of providers offering fixed-rate term loans. Using a connection service allows you to apply to prequalify with multiple providers and quickly find the one that offers the lowest rates. You don’t need a perfect credit score to apply, though you likely won’t qualify for the lowest rates unless you have excellent credit.

Read our review of Even Financial

Monevo personal loans
Monevo is an award-winning online connection service that can help you quickly compare lenders at once. Its partners offer a wide range of loan amounts, terms and rates. They also have some of the lowest interest rates out there. Like with Even, you don’t need perfect credit to apply but you also likely won’t be able to get the lowest rates unless your personal finances are impeccable.

Read our review of Monevo

Prosper Personal loan
Prosper is a peer-to-peer lender that offers investor-funded personal loans. Its interest rates are competitive, though it also charges an origination fee between 2.41% and 5%, which is included in the loan’s APR. APRs are almost entirely based on your credit score, so you’ll need perfect credit to get the lowest rate. It’s not available to borrowers in Iowa, North Dakota or West Virginia.

Who gets the lowest rates?

You might think that all you need to get that 2.99% interest rate is a reasonably good credit score, but the truth is that very few people can qualify for a lender’s absolute lowest rate.

Lenders only offer these low rates to ideal candidates: People who borrow over a certain amount, have a six-figure income and almost no debt. In other words, the kind of person that probably doesn’t need a loan. The average interest rate for people with excellent credit is actually just around 9%.

How do lenders set the interest rate?

Each lender has their own way of setting the interest rate for its applicants. Most consider factors like your credit score, income, debt-to-income ratio (DTI) and negative marks on your credit report such as late repayments and bankruptcies.

However, some lenders have started to consider less conventional factors when setting your interest rate. Your work history, level of education and even how many times you’ve changed your phone number over the past few years could affect your interest rate. Generally, more stable your personal life and career appear to be, the more likely these lenders are to give you a lower rate.

How does applying for a low-interest personal loan work?

If you find a personal loan you’re eligible for, you can either apply online, in person or over the phone, depending on your lender. Many online lenders have pre-qualification options, which give you an estimate of what type of interest rates you might be eligible for without a hard credit check.

After you submit your application, an underwriter (or underwriting software) reviews your file and pulls a hard credit check — which will cause a temporary dip in your credit score. At this point you might be asked to submit additional documentation like bank statements, tax forms or pay stubs.

If you’re approved for an online personal loan, the money is transferred into your bank account electronically. You then have to make repayments on a monthly basis until your loan is paid off.