Finding a personal loan with a low interest rate can save you thousands of dollars over the life of the loan. With so many lenders competing in the market, borrowers have more options than ever before. Whether you need a loan for debt consolidation, home improvements, medical expenses, or an emergency, getting the best rate is key to reducing overall costs.
What Determines a Low-Interest Rate on a Personal Loan?
Lenders evaluate several factors before approving a personal loan and determining the interest rate:
- Credit Score: A higher credit score (typically 700 and above) results in lower interest rates.
- Income & Debt-to-Income Ratio (DTI): A lower DTI (below 35%) shows lenders you can manage monthly payments.
- Loan Term: Shorter terms (12-24 months) often have lower interest rates than longer terms (60+ months).
- Loan Amount: Borrowing higher amounts may come with better rates, but also higher overall interest paid.
- Lender Type: Banks, credit unions, and online lenders offer different rates based on their risk tolerance.
Best Personal Loans with Low Interest Rates in 2025
Below is a comparison of some of the top personal loan providers offering the lowest interest rates this year.
📊 Comparison Table of Top Personal Loans in 2025
| Lender | APR Range | Loan Amount | Loan Term | Minimum Credit Score | Best For |
|---|---|---|---|---|---|
| LightStream | 6.99% – 24.49% | $5,000 – $100,000 | 24 – 84 months | 660+ | Home improvement, large expenses |
| SoFi | 8.99% – 25.81% | $5,000 – $100,000 | 24 – 84 months | 680+ | High loan amounts, no fees |
| Marcus by Goldman Sachs | 6.99% – 24.99% | $3,500 – $40,000 | 36 – 72 months | 660+ | No fees, flexible payments |
| Discover Personal Loans | 7.99% – 24.99% | $2,500 – $40,000 | 36 – 84 months | 660+ | Debt consolidation |
| Upstart | 7.50% – 35.99% | $1,000 – $50,000 | 36 – 60 months | 620+ | Fair credit borrowers |
| PenFed Credit Union | 7.99% – 17.99% | $600 – $50,000 | 12 – 60 months | 660+ | Low rates for members |
🔎 How to Get the Lowest Personal Loan Rates in 2025
1️⃣ Improve Your Credit Score
A higher credit score significantly increases your chances of securing a low-interest loan. Consider these steps:
✔ Pay bills on time and reduce outstanding debt.
✔ Check your credit report for errors and dispute inaccuracies.
✔ Avoid opening multiple new credit accounts before applying.
2️⃣ Compare Multiple Lenders
Online marketplaces and prequalification tools allow you to compare interest rates without affecting your credit score. Consider credit unions, banks, and online lenders to find the best deal.
3️⃣ Choose a Shorter Loan Term
Shorter terms mean less risk for lenders, which often translates to lower rates. A 3-year loan may cost more per month but saves thousands in interest compared to a 5-year loan.
4️⃣ Apply for a Secured Personal Loan
Secured loans, backed by collateral such as a car or savings account, often come with lower rates than unsecured loans. However, they carry the risk of losing the asset if you default.
5️⃣ Use a Co-Signer (If Needed)
Adding a co-signer with strong credit can help you qualify for a better rate, especially if your credit history is limited or your income is low.
💡 Best Low-Interest Personal Loan Options by Category
💰 Best for Debt Consolidation: Marcus by Goldman Sachs – No fees and fixed rates help simplify multiple debts.
🏡 Best for Home Improvement: LightStream – Offers large loan amounts with competitive rates for renovations.
📉 Best for Low Credit Scores: Upstart – Uses AI-driven underwriting to consider alternative credit factors.
🎓 Best for No Fees: SoFi – No origination, late, or prepayment fees.
🚗 Best Credit Union Option: PenFed Credit Union – Low rates for members with smaller loan amounts available.
Frequently Asked Questions (FAQs)
✅ What is the easiest personal loan to get approved for?
Online lenders like Upstart and LendingClub cater to borrowers with fair credit by using alternative approval factors.
✅ Can I get a personal loan with a 600 credit score?
Yes, but your interest rates will be higher. Upstart and some credit unions offer loans for credit scores starting around 600.
✅ Do all personal loans require a hard credit check?
Most lenders perform a soft check for prequalification but require a hard inquiry before final approval.
✅ Is a personal loan better than a credit card?
Personal loans often have lower interest rates than credit cards, making them a better option for long-term financing.
Locking in a low-interest personal loan in 2025 can help you manage expenses without paying excessive interest. By improving your credit, comparing lenders, and choosing the right loan type, you can secure a loan that meets your financial goals.