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Learn About Personal Loans

How Do You Get the Best Personal Loan Rates?

Before you search for the “best” or “lowest” rate for your personal loan, remember that each person’s financial situation is different. There may be other benefits to a loan that recommend it as the best fit for your needs. In other words, sometimes the lowest rate isn’t your best solution if it comes with fees and/or penalties.

That said, it’s good to know what lenders may take into account when calculating your rate and how you can address your financial health in order to find the most advantageous loan for you.

What factors affect personal loan rates?

Credit history

Credit history is usually a primary factor in determining your annual percentage rate on a personal loan.

Generally speaking, your credit score is based on your track record on borrowing money and repaying it. There are different scores, but their calculations generally include:

  • the length of your credit history,
  • how much you owe in credit,
  • payment history (including missed payments), and
  • the number of accounts you have open and how you use them.

Being aware of your credit score (do you have good credit or excellent credit?) will give you an idea of why you may be getting a higher or lower rate on a personal loan. It may help to review your credit report before applying, so there are no surprises.


Generally speaking, a higher income may help, but for Discover Personal Loans and other lenders, there are multiple factors that go into determining an interest rate, so being at a particular income level does not guarantee anything. That said, you must have an annual household income of at least $25,000 to qualify for a Discover personal loan.

As they say, it’s not what you make, it’s what you save, so your income – even if it’s relatively high — might not carry as much weight on your financial standing if you have a lot of debt or expenses.

Related topic: Get more information on debt-to-income ratio here.

Length of loan term and rates

While you obviously want to get the best rate you can, it’s important to understand that your interest rate is not the only thing that determines how much you’ll pay in the long run. Repayment terms matter too.

Let’s take an example using our personal loan calculator to see how much you’ll pay if you want to borrow $20,000 for some home improvements, and you estimate that your credit is very good.

For the sake of this example, let’s say your rate is 12.99% APR. With a repayment term of 36 months, your monthly payments would be approximately $674, for a total of $24,264. At 84 months, you’d pay $364 per month, for a total of $30,576.*

Remember this is just an estimate, but the point is that the longer you take to pay back a loan, the more you’ll pay in interest. The rate isn’t the only thing you should take into consideration.

What steps can I take to find the best personal loan rate?

There are several things you can do that may help you find the best personal loan rates for your financial situation, including:

  • maintain a good credit history,
  • have sufficient income to repay the loan,
  • choose as short a term (length) for your loan repayment as fits in your budget,
  • find a lender that allows you to preview your potential interest rate without affecting your credit score before applying for a loan; and
  • compare online lenders.

It’s important to understand that everyone’s financial background and credit history is unique, so if you qualify for a loan, you may get a rate anywhere within the range that a lender offers. Not only that, but each lender has its own underwriting criteria.

Finally, there are other factors to consider in a lender beyond the interest rate that may make them the best option for you, such as not charging origination fees or prepayment penalties.

Can I preview my interest rate online?

Some online lenders provide tools that let you preview your interest rate before you apply. Discover Personal Loans has a Check Your Rate feature that allows you to find out your interest rate, with no impact to your credit score. By checking your rate, you can get a better idea of the total cost of the personal loan, without fully submitting a hard pull application.

If you find your interest rate is a lot higher than you expected, you can always come back and check your rate when you’ve had time to work on improving your credit health. Or you could look into other factors that may be affecting the interest rate.

How do I compare lenders and rates?

A simple internet search could allow you to compare personal loan rates of various lenders online. However, you’ll want to keep in mind that the rates you see initially are just estimates and may not reflect your individual situation.

You may also want to consider the reputation of the lender, whether you have a preexisting relationship with them and whether or not they have the customer service available to answer all your questions. Consider looking into a local bank or credit union if you are more comfortable with sitting down with someone in person and talking through options.

Rates are important, but borrowing money is a serious commitment, and you want to be confident the lender you choose can see you through from the beginning to the end of the life of the loan.

What else should I think about, beyond the interest rate?

There are several other important factors to consider in your search for the right lender and rate, including origination fees and prepayment penalties. These fees can add to the total cost of the loan and take away some of those benefits. So focus on the full offer that a personal lender has for you instead of making a decision based on lowest interest rate. With Discover Personal Loans you’ll pay no fees as long as you make your payments on time.

Interested in taking out a personal loan? Our personal loan payment calculator makes it easy to estimate monthly payments based on loan amount and credit score. Estimate Payments

*Your APR will be between 6.99% and 24.99% based on creditworthiness at time of application for loan terms of 36-84 months. Information and interactive calculators are made available as self-help tools for your independent use and are intended for educational purposes only. Any results are estimates, and we do not guarantee the applicability or accuracy to your specific circumstance.