Mortgagerateslocal.com – Personal loans are a popular and convenient way to borrow money for different purposes, such as consolidating debt, paying for home improvements, covering medical expenses, or even funding a dream vacation.
But not all personal loans are created equal. Some may charge high interest rates, fees, or penalties that can make your loan more expensive than you expected. If you’re looking for a personal loan, you may want to find one that offers a low interest rate, as well as favorable terms and conditions.
A low-interest personal loan can help you save money on interest charges, reduce your monthly payments, and pay off your debt faster. But how do you find the best low-interest personal loans? And what factors should you consider when comparing different lenders and loan options?
In this article, we’ll answer these questions and more. We’ll also review some of the best low-interest personal loans available in 2023, based on our analysis of various loan features, costs, eligibility, and customer experience. We’ll also provide some tips on how to improve your chances of getting approved for a low-interest personal loan, and how to use it wisely.
What Is a Low-Interest Personal Loan?
A low-interest personal loan is a type of unsecured loan that offers a fixed interest rate that is lower than the average rate for personal loans in the market. According to the Federal Reserve, the average interest rate for a 24-month personal loan was 9.58% in August 2023.
A low-interest personal loan may have an interest rate that is below this average, or even below 5%, depending on your credit score, income, debt-to-income ratio, and other factors. A low-interest personal loan may also have other benefits, such as:
- No collateral required. Unlike secured loans, such as auto loans or mortgages, you don’t need to pledge any asset as collateral to get a low-interest personal loan. This means you don’t risk losing your property if you default on the loan.
- Fixed monthly payments. A low-interest personal loan usually has a fixed repayment term, ranging from 12 to 84 months, depending on the lender and the loan amount. This means you’ll pay the same amount every month until you pay off the loan, which can help you budget and plan ahead.
- Flexible use of funds. A low-interest personal loan can be used for almost any purpose, as long as it’s legal and not prohibited by the lender. You can use it to consolidate high-interest debt, pay for home repairs, cover medical bills, finance a wedding, or anything else you need.
- Fast and easy application process. A low-interest personal loan can be applied for online, without the need to visit a branch or submit a lot of paperwork. You can also get a prequalification offer in minutes, without affecting your credit score. If you’re approved, you can receive the funds in your bank account as soon as the same day or the next business day.
How to Compare Low-Interest Personal Loans
When you’re shopping for a low-interest personal loan, you may want to compare different lenders and loan options to find the best one for your needs and situation. Here are some factors to consider when comparing low-interest personal loans:
Compare Low-Interest rate
The interest rate is the percentage of the loan amount that you’ll pay in interest over the life of the loan. The lower the interest rate, the less you’ll pay in interest. However, the interest rate may vary depending on your credit score, loan amount, loan term, and other factors. You may also want to check whether the interest rate is fixed or variable. A fixed interest rate stays the same throughout the loan term, while a variable interest rate may change according to market conditions.
Annual percentage rate (APR)
The APR is the total cost of borrowing, expressed as a yearly percentage. It includes the interest rate, as well as any fees or charges that the lender may impose, such as origination fees, late fees, prepayment penalties, etc. The lower the APR, the less you’ll pay in total for the loan. However, the APR may not reflect all the costs of the loan, such as insurance premiums, taxes, or other expenses. You may also want to check whether the APR is fixed or variable, as explained above.
Loan amount
The loan amount is the amount of money that you borrow from the lender. The loan amount may range from $500 to $100,000, depending on the lender and your eligibility. The loan amount may affect the interest rate and the APR, as well as the monthly payment and the repayment term. You may want to borrow only the amount that you need, and that you can afford to repay, to avoid paying unnecessary interest and fees.
Repayment term
The repayment term is the length of time that you have to repay the loan, usually in monthly installments. The repayment term may range from 12 to 84 months, depending on the lender and the loan amount. The repayment term may affect the interest rate and the APR, as well as the monthly payment and the total cost of the loan. A longer repayment term may lower your monthly payment, but increase the total interest that you’ll pay. A shorter repayment term may raise your monthly payment, but reduce the total interest that you’ll pay.
Fees and penalties
Fees and penalties are the extra charges that the lender may impose for certain services or situations, such as origination fees, late fees, prepayment penalties, insufficient funds fees, etc. Fees and penalties may increase the APR and the total cost of the loan. You may want to look for a low-interest personal loan that has no or minimal fees and penalties, or that waives them under certain conditions.
Eligibility requirements
Eligibility requirements are the criteria that you need to meet to qualify for a low-interest personal loan, such as credit score, income, debt-to-income ratio, employment status, citizenship, etc. Eligibility requirements may vary depending on the lender and the loan option. You may want to check the minimum eligibility requirements before applying for a low-interest personal loan, to avoid wasting time and hurting your credit score with hard inquiries.
Customer service
Customer service is the quality and availability of the lender’s support and assistance, such as phone, email, chat, online portal, mobile app, etc. Customer service may affect your satisfaction and experience with the lender and the loan. You may want to look for a low-interest personal loan that has a responsive and helpful customer service, that can answer your questions and resolve your issues promptly and effectively.
How to Improve Your Chances of Getting a Low-Interest Personal Loan
If you want to get the best low-interest personal loans in 2023, you’ll need to have a strong credit profile and a stable income. Here are some of the steps you can take to improve your chances of getting approved and saving money on your loan:
- Check your credit score and report: Your credit score and report are the main factors that lenders use to determine your interest rate and eligibility for a personal loan. The higher your credit score, the lower your interest rate and the more likely you are to qualify for a low-interest personal loan. You can check your credit score for free on Credit Karma, and you can get your credit report for free once a year from each of the three major credit bureaus (Equifax, Experian, and TransUnion) at AnnualCreditReport.com. You should review your credit report for any errors or negative information that may lower your credit score, and dispute them with the credit bureaus if necessary.
- Improve your credit score: If your credit score is not high enough to qualify for a low-interest personal loan, you can take some actions to improve it over time. Some of the ways to improve your credit score are: paying your bills on time, keeping your credit card balances low, avoiding new debt, diversifying your credit mix, and increasing your credit limit. You can also use Credit Karma’s credit score simulator to see how different actions may affect your credit score.
- Compare multiple lenders: Different lenders may offer different interest rates, fees, and terms for personal loans, so you should shop around and compare multiple loan options before you apply for one. You can use online tools and platforms, such as Credit Karma’s personal loan marketplace, to compare personalized loan offers from various lenders based on your credit score, loan amount, loan purpose, and other factors. You can also use online calculators, such as Credit Karma’s personal loan calculator, to estimate your monthly payment and total interest for different loan scenarios.
- Prequalify for a loan: Prequalifying for a loan means getting a preliminary offer from a lender based on a soft credit inquiry, which does not affect your credit score. Prequalifying for a loan can help you see your potential interest rate, loan amount, and loan term, without committing to a loan or affecting your credit score. You can prequalify for a loan online, by filling out a short form with some basic information, such as your name, income, credit score, loan amount, and loan purpose. However, prequalifying for a loan does not guarantee that you’ll get approved or get the same terms when you apply for a loan, as the lender may change the offer after a hard credit inquiry, which does affect your credit score.
- Apply for a loan with a co-signer or a co-borrower: If you have trouble qualifying for a low-interest personal loan on your own, you may consider applying for a loan with a co-signer or a co-borrower. A co-signer is someone who agrees to repay the loan if you fail to do so, while a co-borrower is someone who shares the responsibility and the benefits of the loan with you. Applying for a loan with a co-signer or a co-borrower can help you get a lower interest rate and a higher loan amount, as the lender will consider the credit score, income, and debt-to-income ratio of both parties. However, you should be aware of the risks and responsibilities of applying for a loan with a co-signer or a co-borrower, as both of you will be liable for the loan, and any missed or late payments will affect both of your credit scores.
Best Low-Interest Personal Loans of 2023
To help you find the best low-interest personal loans in 2023, we’ve reviewed some of the top lenders that offer low-interest personal loans, based on their interest rates, fees, loan amounts, loan terms, loan purposes, eligibility requirements, customer service, and other features. Here are our picks for the best low-interest personal loans of 2023:
LightStream
LightStream is an online lending division of Truist Bank that offers low-interest personal loans for a wide range of purposes, such as debt consolidation, home improvement, auto, medical, wedding, vacation, and more. LightStream offers competitive interest rates, starting from 2.49% to 19.99% APR, depending on the loan amount, loan term, loan purpose, and your credit profile. LightStream also offers a rate beat program, which means it will beat any competitor’s rate by 0.1 percentage points, if you meet certain conditions.
LightStream does not charge any fees or prepayment penalties for its personal loans, which can help you save money on your loan. LightStream also offers a loan experience guarantee, which means it will give you $100 if you’re not satisfied with your loan process, if you meet certain conditions.
LightStream offers loan amounts ranging from $5,000 to $100,000, and loan terms ranging from 24 to 144 months, depending on the loan purpose. LightStream does not have a minimum credit score requirement, but it prefers borrowers with good to excellent credit, stable income, and a low debt-to-income ratio. LightStream also requires borrowers to have a minimum of five years of credit history, with a mix of credit types, such as credit cards, auto loans, mortgages, etc.
LightStream has a fast and easy online application process, which can be completed in minutes. You can check your rate and prequalify for a loan with a soft credit inquiry, which does not affect your credit score. If you’re approved, you can receive your funds as soon as the same day, depending on the time of day and the verification process. LightStream also offers a paperless loan process, which means you can sign your loan agreement electronically, and receive your funds via direct deposit.
LightStream has a high customer satisfaction rating, with an A+ rating from the Better Business Bureau, and a 4.9 out of 5 rating from Trustpilot. LightStream also has a responsive and helpful customer service team, which can be reached by phone, email, or online chat.
LightStream is a great option for borrowers who have good to excellent credit, and who are looking for low-interest personal loans for various purposes, with no fees or prepayment penalties.
SoFi
SoFi is an online lending platform that offers low-interest personal loans for debt consolidation, home improvement, medical expenses, relocation, and more. SoFi offers competitive interest rates, starting from 5.99% to 18.85% APR, depending on your credit profile and the loan term. SoFi also offers a 0.25% discount if you enroll in autopay, which can lower your interest rate even further.
SoFi does not charge any fees or prepayment penalties for its personal loans, which can help you save money on your loan. SoFi also offers some unique benefits and features for its personal loan borrowers, such as:
- Unemployment protection: If you lose your job through no fault of your own, you can apply for unemployment protection, which allows you to pause your loan payments for up to 12 months, in three-month increments. During this period, SoFi will also provide you with career coaching and job search assistance, to help you get back on your feet.
- Member benefits: As a SoFi member, you can access various perks and benefits, such as financial planning, career coaching, referral bonuses, community events, discounts on other SoFi products, and more.
- Hardship forbearance: If you experience a financial hardship due to a qualifying event, such as a natural disaster, illness, or death in the family, you can apply for hardship forbearance, which allows you to temporarily reduce or suspend your loan payments for up to three months, in one-month increments.
SoFi offers loan amounts ranging from $5,000 to $100,000, and loan terms ranging from 24 to 84 months. SoFi does not have a minimum credit score requirement, but it prefers borrowers with good to excellent credit, high income, and a low debt-to-income ratio. SoFi also considers your education, career, and financial history, when evaluating your loan application.
SoFi has a simple and fast online application process, which can be completed in minutes. You can check your rate and prequalify for a loan with a soft credit inquiry, which does not affect your credit score. If you’re approved, you can receive your funds within a few days, depending on the verification process. SoFi also offers a paperless loan process, which means you can sign your loan agreement electronically, and receive your funds via direct deposit.
SoFi has a high customer satisfaction rating, with an A+ rating from the Better Business Bureau, and a 4.3 out of 5 rating from Trustpilot. SoFi also has a friendly and helpful customer service team, which can be reached by phone, email, or online chat.
SoFi is a great option for borrowers who have good to excellent credit, and who are looking for low-interest personal loans with no fees, prepayment penalties, or origination fees, and with some extra benefits and features.
Marcus by Goldman Sachs
Marcus by Goldman Sachs is an online lending platform that offers low-interest personal loans for debt consolidation, home improvement, wedding, moving, and more. Marcus by Goldman Sachs offers competitive interest rates, starting from 6.99% to 19.99% APR, depending on your credit profile and the loan term. Marcus by Goldman Sachs also offers a 0.25% discount if you enroll in autopay, which can lower your interest rate even further.
Marcus by Goldman Sachs does not charge any fees or prepayment penalties for its personal loans, which can help you save money on your loan. Marcus by Goldman Sachs also offers some unique benefits and features for its personal loan borrowers, such as:
- On-time payment reward: If you make 12 or more consecutive monthly payments on time and in full, you can defer one monthly payment without accruing any interest or fees. This can help you manage your cash flow and reduce your loan term.
- Personalized loan options: You can customize your loan amount and loan term to suit your needs and budget. You can also change your payment date up to three times during the life of the loan, without any fees or penalties.
- Financial tools and resources: You can access various financial tools and resources, such as budgeting tools, debt payoff calculators, credit score simulator, financial articles, and more, to help you improve your financial health and wellness.
Marcus by Goldman Sachs offers loan amounts ranging from $3,500 to $40,000, and loan terms ranging from 36 to 72 months. Marcus by Goldman Sachs does not have a minimum credit score requirement, but it prefers borrowers with good to excellent credit, steady income, and a low debt-to-income ratio. Marcus by Goldman Sachs also considers your credit history, payment history, and other factors, when evaluating your loan application.
Marcus by Goldman Sachs has a simple and fast online application process, which can be completed in minutes. You can check your rate and prequalify for a loan with a soft credit inquiry, which does not affect your credit score. If you’re approved, you can receive your funds within one to four business days, depending on the verification process. Marcus by Goldman Sachs also offers a paperless loan process, which means you can sign your loan agreement electronically, and receive your funds via direct deposit.
Marcus by Goldman Sachs has a high customer satisfaction rating, with an A+ rating from the Better Business Bureau, and a 4.8 out of 5 rating from Trustpilot. Marcus by Goldman Sachs also has a friendly and helpful customer service team, which can be reached by phone, email, or online chat.
Marcus by Goldman Sachs is a great option for borrowers who have good to excellent credit, and who are looking for low-interest personal loans with no fees, prepayment penalties, or origination fees, and with some extra benefits and features.
Payoff
Payoff is an online lending platform that specializes in low-interest personal loans for credit card debt consolidation. Payoff offers competitive interest rates, starting from 5.99% to 24.99% APR, depending on your credit profile and the loan term. Payoff also offers a 0.25% discount if you enroll in autopay, which can lower your interest rate even further.
Payoff does not charge any fees or prepayment penalties for its personal loans, except for an origination fee, which ranges from 0% to 5% of the loan amount. The origination fee is deducted from the loan amount before it is disbursed to you, so you don’t have to pay it upfront. Payoff also offers some unique benefits and features for its personal loan borrowers, such as:
- Credit score improvement: Payoff claims that its borrowers can improve their credit score by 40 points on average, within four months of paying off their credit card debt with a Payoff loan. Payoff also provides you with free access to your FICO score, updated monthly, and your credit report, updated quarterly, to help you monitor your credit progress.
- Financial coaching and support: Payoff provides you with personalized financial coaching and support, to help you achieve your financial goals and stay on track with your loan payments. You can access various financial tools and resources, such as budgeting tools, debt payoff calculators, financial articles, and more, to help you improve your financial health and wellness. You can also contact Payoff’s friendly and helpful customer service team, which can provide you with guidance and advice on your loan and your finances.
- Member benefits: As a Payoff member, you can access various perks and benefits, such as referral bonuses, discounts on other Payoff products, and more.
Payoff offers loan amounts ranging from $5,000 to $40,000, and loan terms ranging from 24 to 60 months. Payoff has a minimum credit score requirement of 640, and a minimum annual income requirement of $40,000. Payoff also requires borrowers to have a debt-to-income ratio of 50% or less, a credit history of at least three years, and no delinquencies in the past 12 months.
Payoff has a simple and fast online application process, which can be completed in minutes. You can check your rate and prequalify for a loan with a soft credit inquiry, which does not affect your credit score. If you’re approved, you can receive your funds within two to five business days, depending on the verification process. Payoff also offers a paperless loan process, which means you can sign your loan agreement electronically, and receive your funds via direct deposit.
Payoff has a high customer satisfaction rating, with an A+ rating from the Better Business Bureau, and a 4.7 out of 5 rating from Trustpilot. Payoff also has a friendly and helpful customer service team, which can be reached by phone, email, or online chat.
Payoff is a great option for borrowers who have good to excellent credit, and who are looking for low-interest personal loans for credit card debt consolidation, with no fees, prepayment penalties, or origination fees, and with some extra benefits and features.
Conclusion
Low-interest personal loans can help you finance various goals, such as debt consolidation, home improvement, medical expenses, wedding, vacation, and more, with lower interest rates, fixed monthly payments, and fixed repayment terms, than other forms of borrowing, such as credit cards.
However, not all personal loans are created equal, and some lenders may charge higher interest rates, fees, and penalties than others, which can increase the total cost of borrowing and make your loan less affordable. We hope this article has helped you find the best low-interest personal loans for your needs and budget.
