The Best Personal Loan Rates for July 2021 | TheValu

Best Personal Loan Rates for July 2021

As of Fri. July 30, 2021

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TheValu Guide to Getting a Personal Loan

Personal loans are fixed-rate loans that allow consumers to receive short-term loans from banks, credit unions, or private lenders. A personal loan can be used for any reasonable purpose. Popular uses of personal loans are paying off debt (credit card or other), financing a home renovation, paying for unexpected emergency expenses (dental or medical bills, car repairs, etc.), and paying for life events like weddings or moving.

When receiving a personal loan, the borrower will receive the lump sum of their loan amount deposited directly into their bank account. Most personal loan terms range from 24 months to 60 months, however, some lenders offer personal loans whose terms can be as long as 72 months. Personal loans are paid back in monthly installments, meaning you’ll have a set amount that needs to be paid back every month.

Personal loans are mostly unsecured, this means that they are not backed by collateral like a car, house, or other assets. Secured personal loans are personal loans backed by collateral, these personal loans come with lower APRs as they are backed by a physical asset.

A personal loan can be a good choice if you need cash fast because the approval and funding process is faster than that of other funding options like a home equity line of credit.

What APR should I expect?

Having good credit helps when getting a personal loan, good to excellent credit (690 and higher on the FICO scale) borrowers will typically receive the lowest interest rates, have the most lender options, and will have the ability to borrow at higher loan amounts.

Borrowers with fair to bad credit (FICO scores below 689) will have a tougher time finding personal loan options and might have to pay a higher rate. However, some online lenders offer personal loans that made for low-credit borrowers. These lenders offer loans with rates from 18% to 36% APR. Having a steady income, low debt, long credit history and a record of on-time payments will improve your chances of being approved.

Here’s TheValu’s breakdown on personal loans by credit score:

Credit Score Credit Score Range Est. APR
Excellent 720 – 850 9% – 13%
Good 690 – 719 13%- 16%
Average 630 – 689 16% – 20%
Bad 300- 629 25% – 35.99%

When Shopping for a personal loan keep in mind the following:

  • Your Credit Score: Your personal loan options will be heavily based on your credit score. Keeping in mind your credit score gives you an idea of what to expect as you shop for loans. If finding a lending option is difficult because of your credit score. it may be a good option to postpone getting a loan and instead take steps to build your credit.
  • Shop Around (Compare Options): It is important to take a look at all your funding options to help save you on the cost of interest. It might also make sense to look at other financing options, for example, if you can qualify for a 0% interest credit card then pay off the balance within the promotional period, then you’re better off with the credit card.
  • Option for a co-signer: For borrowers with bad credit, having a co-signer with good credit and a high income enables you to piggyback on his or her creditworthiness, potentially expanding your loan options and getting a lower rate.
  • Secured or unsecured personal Loan: Keep in mind whether you want an unsecured or a secured personal loan. Using your home, a car, your savings account, or another asset as collateral can help you get a lower rate and expand your lending options.
  • Does the lender charge an origination fee?: Some lenders, not all though, charge a one-time fee for their service when getting a personal loan from them. This is known as an “origination fee”. How origination fees work is the lender will take a certain percentage off the value of the loan as a fee. For example, if you are approved for a personal loan for $10,000 and the lender charges a 5% origination fee, you will only receive $9,500 but will have to pay back the original $10,000 with interest. This can greatly increase the overall cost of your loan if you do not pay attention to this detail.

When Shopping for a personal loan keep in mind the following:

  • Your Credit Score: Your personal loan options will be heavily based on your credit score. Keeping in mind your credit score gives you an idea of what to expect as you shop for loans. If finding a lending option is difficult because of your credit score. it may be a good option to postpone getting a loan and instead take steps to build your credit.
  • Shop Around (Compare Options): It is important to take a look at all your funding options to help save you on the cost of interest. It might also make sense to look at other financing options, for example, if you can qualify for a 0% interest credit card then pay off the balance within the promotional period, then you’re better off with the credit card.
  • Option for a co-signer: For borrowers with bad credit, having a co-signer with good credit and a high income enables you to piggyback on his or her creditworthiness, potentially expanding your loan options and getting a lower rate.
  • Secured or unsecured personal Loan: Keep in mind whether you want an unsecured or a secured personal loan. Using your home, a car, your savings account, or another asset as collateral can help you get a lower rate and expand your lending options.
  • Does the lender charge an origination fee?: Some lenders, not all though, charge a one-time fee for their service when getting a personal loan from them. This is known as an “origination fee”. How origination fees work is the lender will take a certain percentage off the value of the loan as a fee. For example, if you are approved for a personal loan for $10,000 and the lender charges a 5% origination fee, you will only receive $9,500 but will have to pay back the original $10,000 with interest. This can greatly increase the overall cost of your loan if you do not pay attention to this detail.

Coronavirus impact on the personal loan market

The impact of COVID-19 has left millions of Americans without a reliable source of income, as a result, many have turned to personal loans to cover emergency expenses. In response to this unprecedented market condition, some banks and online lenders have announced new loan offerings with lower interest rates to help American consumers in need of financial help. Current personal loan borrowers may also be able to take advantage of loan relief programs. With some lenders, borrowers might be eligible to temporarily defer payments or waive fees.

What are coronavirus hardship loans?

Coronavirus hardship loans are short-term personal loans offered by lenders as a response to the coronavirus pandemic to help Americans financially affected by the pandemic. Coronavirus hardship loans are typically less than $5,000 and may have to be repaid within three years or less. Coronavirus hardship loans are offered by banks, online lenders, and credit unions in particular.