After quietly ending 2023, dropping by 2 basis points, average personal loan rates fell by another 6 points to begin 2024. The average tracked by Investopedia, currently 22.99%, breached the 23% level for the first time in early December and later notched its highest level a week later, at 23.47%, since Investopedia began tracking rates in Jan. 2023. Average interest rates split out by credit quality were mixed again this week, with two moving up and two moving down, moderating the week-over-week change in the overall average. Specifically, average rates for those with excellent credit dropped by a third of a percent while good credit rates edged up by 14 points. Rates for fair credit moved up significantly to 2.74% while rates for poor credit dropped even more, by just over 5%. Loans for those in the lower credit bands were less numerous and therefore had less of an effect on the combined average this week. Credit quality is a major component of quoted rates, but other factors are considered, such as loan amount and loan repayment term. The net effect of the mixed rate movements across the four credit tiers resulted in a net decrease of 6 basis points for the overall personal loan rates average this week.

Below are personal loans from our partners, followed by personal loan rates, information, and recommendations based on our research to help you find the best personal loan for your situation.

Lender	Average APR	Average Loan Term (Months)	Average Loan Amount
	25.90%	42	$31,901
	28.45%	36	$11,426
	23.25%	47	$17,022
	13.36%	37	$25,234
	16.48%	44	$21,281
	16.26%	43	$19,825
	25.75%	44	$15,692
	13.53%	66	$29,224
	31.17%	32	$5,945
	28.79%	46	$8,160
	22.88%	47	$17,973
	25.26%	42	$17,853
	29.64%	45	$7,078
	15.29%	50	$33,485
	22.08%	47	$16,601
	23.24%	47	$16,540
	29.95%	52	$9,159
	22.53%	38	$14,039
All Lenders	22.99%	45	$17,691

Personal Loan APRs by Credit Tier
Credit Tier	Average APR Last Week	Average APR This Week	Week-Over-Week Change
Excellent	21.37%	21.05%	- 0.32
Good	23.71%	23.85%	+ 0.14
Fair	26.10%	28.84%	+ 2.74
Poor	25.96%	20.79%	- 5.17
All tiers	23.05%	22.99%	- 0.06

Personal loan rates began rising over the course of 2022 and in 2023 due to a sustained series of interest rate hikes by the Federal Reserve. To fight the highest inflation rates seen in 40 years, the Fed not only raised the federal funds rate at 11 of its rate decision meetings (except for its June, Sep., Nov., and Dec. 2023 meetings), but it often hiked rates by historically large increments. Indeed, six of those increases were by 0.50% or 0.75%, though the last five increases were more modest at only 0.25%.

The Fed announced at its latest meeting on Dec. 13 that it would hold rates steady. For the upcoming Fed meeting on Jan. 31, 2024, approximately 91% of futures traders are predicting the fed funds rate will hold steady, whereas approximately 9% are predicting a potential 25 basis point decrease.

The Federal Reserve and Personal Loan Rates

Generally speaking, moves in the federal funds rate translate into moves in personal loan interest rates, in addition to credit card rates. However, the Federal Reserve's decisions are not the only rate-setting factor for personal loans. Also important is competition, in 2023 the demand for personal loans increased substantially and will likely continue into 2024.

Though decades-high inflation has caused the Fed to raise its key interest rate by 525 basis points since March 2020, average rates on personal loans haven't risen that dramatically. That's because high borrower demand requires lenders to aggressively compete for closed loans, and one of the primary ways to beat the competition is to offer lower rates. Though personal loan rates did increase in 2022 and 2023, fierce competition in this space prevented them from rising at the same rate as the federal funds rate.

While inflation has recently begun to drop, it remains higher than the Fed's target rate of 2%. The Fed has opted to hold rates steady at its last four meetings, which concluded June 14, Sept. 20, Nov. 1, and Dec. 13. At the Fed's last meeting Fed Chair Jerome Powell signaled that the Fed's aggressive campaign of rate hikes is likely over, and that up to three rate decreases were possible in the coming year.

What Is the Predicted Trend for Personal Loan Rates?

If the Fed continues to hold the federal funds rate steady or drops rates at any of its future meetings next year, personal loan rates could potentially begin to trend downward. However, with competition for personal loans still stiff, other factors like the delinquency rate on personal loans could offset the lower cost of funds potentially enjoyed by lenders if the prime rate drops, keeping rates near their current levels. Because most personal loans are fixed-rate products, all that matters for new loans is the rate you lock in at the outset of the loan (if you already hold a fixed-rate loan, rate movements will not affect your payments). If you know you will certainly need to take out a personal loan in the coming months, it's likely (though not guaranteed) that rates in the future will be better than what you can get now, depending on how rates react to any Fed rate decreases or pauses. Unlike credit card rates, which are typically variable and are indexed to the prime rate, fixed-rate personal loans offer the opportunity to know what you will be paying over the term of the loan.

It's also always a wise move to shop around for the best personal loan rates. The difference of 1 or 2 percentage points can easily add up to hundreds or even thousands of dollars in interest costs by the end of the loan, so seeking out your best option is time well invested.

Lastly, don't forget to consider how you might be able to reduce your spending to avoid taking out a personal loan in the first place, or how you could begin building an emergency fund so that future unexpected expenses don't sink your finances and necessitate taking out additional personal loans.

How Do People Use Personal Loans?

daftarlapak303.commissioned a national survey of 962 U.S. adults between Aug. 14, 2023, to Sept. 15, 2023, who had taken out a personal loan to learn how they used their loan proceeds and how they might use future personal loans. Debt consolidation was the most common reason people borrowed money, followed by home improvement and other large expenditures.

Rate Collection Methodology Disclosure

Investopedia surveys and collects average advertised personal loan rates, average length of loan, and average loan amount from 15 of the nation's largest personal lenders each week, calculating and displaying the midpoint of advertised ranges. Average loan rates, terms, and amounts are also collected and aggregated by credit quality range (for excellent, good, fair, and bad credit) across 29 lenders through a partnership with Fiona. Aggregated averages by credit quality are based on actual booked loans. Results for how people use personal loans were obtained through a national survey of 962 U.S. adults aged 20 to 75 who are currently borrowing or planning to borrow a personal loan from 70 different lenders. Respondents opted-in to an online, self-administered questionnaire from a market research vendor. Data collection took place between Aug. 14, 2023, and Sept. 13, 2023, with semi-structured interviews conducted with 17 respondents from Aug. 30, 2023, to Sept. 15, 2023. Multiple quality checks, including screeners, attention gauges, comprehension evaluations, and logic metrics, among others, were used to ensure only the highest quality responses were included.