What is the average APR for personal loan?

average apr for personal loan

The average APR for a personal loan will depend largely on your credit score and the lender you choose to work with. 

A personal loan is a popular choice for many people when they have an expense. Currently about 23 million Americans have unsecured personal loans.1 These loans are extremely versatile, making them a good fit for a variety of budgets. Thinking about a personal loan but are unsure about the details, including the average APR—the total cost of the loan, including the interest rate. 

Below, you will learn more about the average APR of a personal loan and how lenders get there. Along with that, you will find more information on these loans in general. 

What Does APR Mean in Terms of a Personal Loan?

If you are unsure about the term APR, it will be helpful to learn more about what this term means and how it impacts a personal loan. 

APR stands for annual percentage rate, as mentioned briefly above, and is the total cost of your loan, including interest. Interest for a personal loan is pretty straightforward to most of us; it is a percentage you pay on top of the money you borrowed from your lender. 

Many people get APR confused with personal loan interest rates, because these terms are often used interchangeably in conversational terms, but as you now know, these are two different. 

The few other costs that can come with APR can include things like: 

Cost TypeDescription
Origination FeesInitial fees charged by the lender for loan processing.
Balloon PaymentsLarger final payment, often associated with certain types of loans.
Insurance RequirementsMandatory insurance, typically with mortgage loans.
Processing CostsFees associated with the processing of the loan.

The Impact of APR on Personal Loans

When borrowing the same amount of money with the same repayment terms, the higher your APR, the higher your monthly payment and the amount you will have to pay for borrowing the loan. In comparison, a lower APR will mean a lower monthly payment and less to pay for borrowing costs. And so, it will be extremely important to consider APR before you choose a personal loan to borrow. 

How To Find Out APR for a Personal Loan?

Your goal with APR is to keep it as low as it can possibly be for your financial situation. The great news is that most lenders are upfront about their APR ranges in general. For a more personalized rate, you can apply for pre-approval. 

Although applying for final approval will let you know the exact terms, you may want to compare several personal loan rates loan with pre-approval before moving forward with the final approval process. This is because final approvals usually include a hard credit check, and several in a short period of time will hurt your credit score. 

Is There an Average APR for Personal Loans? 

Although you may be able to find a few different average ranges for APRs with personal loans, it may not be accurate to what you will find when you begin your search for a personal loan product. 

That is because there are a few different factors that go into determining the APR, and knowing what those are will help you come up with a better idea of what your personal loan costs may be. Here are some of the different variables that impact personal loan APRs:

Your Credit Score and Credit History With Personal Loan Rates

Your credit score is a huge factor that determines the cost of every loan you inquire about, including personal loan options. Your credit score is made up of different actions that you make with your credit history

By looking at your score, lenders will be able to get a picture of what they can expect when it comes to repayment if they do decide to move forward with you. And so, naturally, the higher your credit score, the better your chances of approval and the better loan terms you will get, including a lower APR. Lower credit scores will mean higher interest and APRs.

Your Debt-to-Income Ratio

Another important factor that will impact your APR is the amount of debt (credit card debt, student loans, car loans, etc.) you have in relation to your income, which is your debt-to-income ratio. 

Generally, it is a good idea to keep your debt-to-income ratio under 30%. This ratio will help a lender decide whether you will be able to make the required monthly payments to repay your loan on time. It will also impact your credit score. Having a high ratio can hurt your score, while a balanced amount of debt and diverse credit accounts can help. 

Personal Loan Lenders

You can find personal loans with financial institutions like a bank or credit union, but you can also find online lenders. With online lenders, you will likely get more flexibility, and you may notice more of a range with the average personal loan interest rate and APR. If you have a low credit score, an online personal loan is likely your best choice. 

The Type of Personal Loan You Are Looking Into

On a macro level, you can separate personal loans into two categories: secured personal loans and unsecured personal loans. A secured personal loan involves an asset for collateral, while an unsecured one does not. 

Usually, secured personal loans are for borrowers with less than good credit, and so the APR will be higher because of the risk. While an unsecured personal loan may be a little more challenging to qualify for and may have a minimum credit score requirement (fair or bad credit can sometimes still be okay, though, depending on the lender),  and so the APR is usually lower.

How to Increase My Chances of Getting a Better APR

There are definitely things you can do to improve your chances of getting the most affordable personal loan you can; here are some tips:

Try to Improve Your Credit Score 

Your credit score is one of the main factors in determining personal loan APR, and so it will be a huge help to improve your credit score. There are some simple ways to approach this; for example, paying your bills on time for your credit accounts can be very helpful over time! 

Other things include avoiding taking out new credit accounts before taking out a personal loan, getting all your payments reported (rent or utilities), or paying off debt.

Look at a Few Options Before Picking a Loan 

Because every lender is so different, it will be helpful to look at several lenders before choosing a personal loan. And so, to find the most affordable option, definitely apply for pre-approval to compare your personal loan offers. 

Add a Cosigner to Your Personal Loan

A cosigner is a third party—usually a family member or close friend—that you can add to your loan to increase your chances of approval and potentially get a higher loan amount and lower APR. 

Your cosigner will need to have a good credit score/credit history and some sort of income. Although a cosigner can be helpful, it is important to really think about this option because the cosigner will be responsible for paying your loan if you cannot do so. 

Other Things to Think About To Get the Best Loan

APR is definitely important when finding the best personal loan option for you. However, that isn’t the only thing you need to consider. Here are some other factors you should pay attention to before deciding on your personal loan:

How Long or Short Your Personal Loan Is

The length of your personal loan is extremely important! You’ll want to be able to afford your loan but not have it go for too long, as you’ll end up paying more. In general, a longer loan will mean a lower monthly payment but more interest over time. While a shorter loan will have a higher monthly payment, you’ll save money on interest over the life of the loan. 

The Monthly Payment On Your Loan 

It is crucial to consider the monthly payment on your loan. If you don’t, you may end up missing multiple payments and defaulting on your loan, which can be devastating for your credit. In fact even a few late payments in a short period of time can take an excellent credit score down to a fair or poor credit score. 

The Loan Amount for Your Personal Loan 

Your personal loan amount is also important; you’ll want to be able to cover the total cost of your expenses, and it is up to you whether you want to take out more than you need. However, unnecessary debt is never a good idea. Keep in mind you never have to borrow more money than you need.  

Flexibility With Repayment 

Some personal loans and lenders are more flexible than others. For example, with some lenders, you may be charged a fee for early repayment, or you may not get a grace period. This is another reason why reviewing loan terms carefully is important before you sign up for a personal loan. 


What’s the difference between personal loan interest rates and the annual percentage rate (APR)?

Personal loan interest rates refer to the cost you pay each year to borrow money, excluding other fees. The annual percentage rate (APR), on the other hand, includes the interest rate plus other costs like origination fees, making it a more comprehensive measure of loan cost.

How does my credit score affect my eligibility for competitive personal loan rates?

Your credit score is a crucial factor in determining your eligibility for personal loans. A higher credit score typically means you’re a lower-risk borrower, which can lead to more favorable personal loan rates and terms from lenders.

Can online lenders offer better average personal loan interest rates than credit unions or banks?

Online lenders often have lower overhead costs compared to traditional banks and credit unions, which can allow them to offer competitive, if not better, average personal loan interest rates. However, it’s always wise to compare offers from various sources.

What should I consider when comparing monthly payments for different personal loans?

When comparing monthly payments, consider not only the amount but also the loan term and interest rates. A lower monthly payment might seem attractive, but it could result in higher overall costs if the loan term is longer.

How can consolidating credit card debt with a personal loan affect my financial situation?

Consolidating credit card debt with a personal loan can streamline your finances by combining multiple high-interest debts into a single loan with a potentially lower interest rate. This can lead to lower monthly payments and a quicker debt payoff.

Are there any additional fees, like origination fees, that I should be aware of when taking out a personal loan?

Yes, some personal loans come with origination fees, which are charged for processing the loan. These fees can vary by lender and are typically deducted from the loan amount before you receive it, so it’s important to factor them into your decision.

What’s the advantage of choosing unsecured personal loans over secured ones?

Unsecured personal loans don’t require collateral, making them a less risky option if you’re unable to repay the loan. However, they might come with higher interest rates compared to secured loans, especially if you have a lower credit score.

The Bottom Line With CreditNinja: Average APR for Personal Loans 

There are average APR ranges for personal loans, depending on your credit scores; however, they may not be helpful for your particular situation. The bottom line is that every personal loan is different for every kind of borrower, and you won’t know specifics until you apply for pre-approval. 

What will be more helpful when figuring out APR is knowing the different factors that impact APR, which are your credit score/credit history, the type of personal loan you are looking into, your debt-to-income ratio, and the lender you are working with. To learn more about personal loans, installment loans, bad credit loans, APRs, and more, check out the CreditNinja dojo.


  1. Personal Loan Data and Statistics (2023) | Market Watch

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