What is Interest Rate On Personal Loans?
The interest rate of a personal loan is the percentage of the loan principal that lenders charge for borrowers to access the loan funds.
On average, personal loan interest rates range from 10% to 28%, but this varies based on inflation, the current demand for credit and other economic factors.
Current Interest Rate On Personal Loans In South Africa
Personal loan rates currently range from around 4% to 36%, depending on the lender, borrower creditworthiness and other factors.
While interest rates are not the only costs associated with taking out a loan, it’s important to compare lenders to identify the best personal loan rates available.
The above personal loan rates and details are accurate as of March 15, 2025. While we update this information regularly, the annual percentage rates (APRs) and loan details may have changed since the page was last updated.
Keep in mind, some lenders make specific rates and terms available only for certain loan purposes. Be sure to confirm available APR ranges and loan details, based on your desired loan purpose, with your lender before applying.
Below are Tips for Comparing Personal Loan Rates
In general, annual percentage rates (APRs) vary by lender and depend on several factors, including the applicant’s creditworthiness. However, there are several things you can do to access the lowest rate possible when applying for a personal loan. Consider these factors when comparing personal loan rates:
Credit score and eligibility requirements. Credit scores are the main factor in determining the interest rate a borrower qualifies for through a lender. Evaluate each lender’s eligibility requirements to see how your score compares to the minimum credit score requirement. This can help determine whether you’re likely to qualify for the lender’s lowest—or highest—rates.
Average borrower rates. While banks and online lenders advertise a range of available interest rates, it is not always clear how many borrowers actually qualify for the most competitive offerings. Some lenders publish the average interest rate borrowers qualify for, but it may be necessary to read customer reviews to see whether the average borrower qualifies for competitive rates.
Loan amounts and repayment terms. Higher loan amounts typically come with higher interest rates to make up for the increased lending risk. Likewise, longer loan terms are often accompanied by higher APRs. When comparing lenders, consider whether the personal loan rates can be reduced by changing the structure of the loan.
Additional costs. Beyond a lender’s interest rates, consider whether borrowers are charged any additional fees that can increase the APR and overall cost of borrowing. This may include origination fees that are charged when the loan is disbursed, late fees or prepayment penalties.
How to Get the Best Personal Loan Rates
The most competitive personal loan rates are typically reserved for the most creditworthy borrowers. However, there are other factors that can impact rates, and it is possible to get a lower rate without a stellar credit profile. Follow these tips to get the best personal loan rates:
Understand your credit report. Before prequalifying or applying for a personal loan, request a copy of your credit report from one of the three main credit bureaus—Equifax, Experian and TransUnion. A credit report includes valuable insight into how your credit scores are calculated and how much risk you pose to lenders. Likewise, check your credit score and use it to prequalify for an APR before submitting to a hard credit inquiry.
Calculate the best loan amount and term. Personal loan APRs are generally higher for larger loans and more extended repayment terms. That said, shorter repayment terms mean larger monthly payments. Use a personal loan calculator to determine how much monthly payment you can afford, and then opt for the shortest possible loan term.
Apply with a co-signer or co-borrower. If you won’t qualify for a competitive APR based on your personal credit, consider applying with a co-borrower or co-signer who has a higher credit score. This approach can lead to higher approval odds and lower personal loan rates.
Choose a secured loan. A secured personal loan is one that is collateralized by a valuable asset, such as real estate. If a borrower defaults on a secured loan, the lender can seize the collateral in order to recoup the outstanding loan balance. Because secured loans are less risky to lenders, they may be a better fit for borrowers who can’t qualify for a personal loan or a competitive APR.
Take advantage of rate discounts. Many lenders offer rate discounts to borrowers who sign up for automatic payments during the loan application process. When comparing lenders, choose an option that offers autopay discounts or other savings opportunities.
Opt for a fee-free lender. To remain competitive, some lenders moved to a fee-free structure that does not charge origination fees, late payment fees, prepayment penalties or other additional costs. Choosing a fee-free lender can reduce the overall cost of a loan, thereby reducing the APR.
How Lenders Determine Personal Loan Rates
Lenders determine personal loan rates based on several factors, but the applicant’s credit score and overall credit profile are the most important.
Many traditional and online lenders also look at the prospective borrower’s income and current outstanding debts to determine their debt-to-income ratio (DTI).
DTI is the ratio of a borrower’s monthly income to their monthly debt service and is used to evaluate an applicant’s ability to make on-time payments. The higher the DTI, the riskier the borrower—and the higher the interest rate they’ll likely receive.
When determining personal loan rates, some online and alternative lenders also look at a prospective borrower’s occupation and education to evaluate earning potential. Likewise, lenders may evaluate the risk posed by a borrower based on where they live.
Average Personal Loan Rates By Credit Score
Interest rates vary by lender, borrower qualifications and loan characteristics. However, interest rates are best predicted by a borrower’s credit score. According to Experian, the average interest rates for Vantage Score ranges are as follows:
| CREDIT CLASSIFICATION | VANTAGE V4 CREDIT RANGE | AVERAGE ESTIMATED INTEREST RATE (%) |
|---|---|---|
| Super prime | 781 to 850 | 6.39 |
| Prime | 661 to 780 | 10.54 |
| Near prime | 601 to 660 | 15.63 |
| Subprime | 500 to 600 | 17.27 |
| Deep subprime | 300 to 499 | 17.35 |
What Are Current Personal Loan Rates?
Current personal loan rates range from around 4% to 36%, with the average hovering around 10% to 13% as of February 2025. That said, available APRs vary by lender, and only the most qualified borrowers can access the lowest rates.
What Is a Good Personal Loan Rate?
A good interest rate on a personal loan is one that is lower than the national average. So, a rate below 10.42% for three-year loans and 12.62% for five-year loans—the average as of February 2025—is considered a good personal loan rate. However, borrowers with excellent credit scores may qualify for even lower rates.