For the week ending May 31, average personal loan rates for 5-year loans have ticked up to 24.29% from 22.08% a week prior, and average rates for 3-year loans have hit an 8-week high of 23.51%. But fortunately for those with excellent credit, rates are significantly lower, with 5-year loans at 14.87% and 3-year loans at 13.90%, according to Bankrate’s latest data. (You can see the lowest rates you may qualify for here.)
Personal loans can be used for a variety of reasons, from consolidating high-interest debt to paying for large purchases like a needed home repair. Some personal loans fund in as little as a day, and many personal loans don’t require collateral, so if quick and easy access to a lump sum of money is what you’re after, you’ll likely want to consider a personal loan.
On the flip side, personal loans often come with higher interest rates than home equity loans or HELOCs, which means you’ll pay more over the life of the loan. And experts advise borrowers only take out the amount of money they actually need, instead of padding their loan. Just because it’s easy to get your hands on a personal loan, if you withdraw more than you’ll actually use, you still have to pay back the loan in its entirety — plus interest.
To make sure you get the best rates and terms, experts recommend getting quotes from a few different lenders and ensuring your credit score is as high as possible and your finances are in order. Read our guide on 6 things to know before you take out a personal loan here.