How much will a personal loan cost?
As with most credit products, the rate you receive on a personal loan depends a lot on your credit score. Borrowers with fair or average credit will pay a higher rate — somewhere around 20%, according to a NerdWallet lender survey — than those with good credit. The interest rate also affects your total monthly payment, as does the term length; a longer term means lower monthly payments, but more interest.
How to qualify for fair-credit loans
Focus on your credit score. Even if lenders look at other factors, your credit score is a key consideration. Building your credit can mean better odds of qualifying and getting a lower rate.
Add a joint applicant or co-signer to your application. There are risks to co-signing, but it’s an option that can help you qualify for a loan that you wouldn’t be able to on your own because of fair credit or low income. Online lenders and banks offer joint and co-signed loans.
Consider a credit union. Credit unions tend to know their members and their financial histories and may offer lower rates and more flexible terms to borrowers with average credit. Federal credit unions cap interest rates at 18%.
Pre-qualify with multiple lenders. Many online lenders allow you to pre-qualify to see rates and terms you may receive. This usually involves a soft credit check, which doesn’t affect your credit score, and it allows you to compare rates and terms.
Pre-qualify for a personal loan
Most online lenders will give you preview of the rates and terms you may receive by performing a soft check of your credit. This won’t affect your credit score, so it pays to take the steps to pre-qualify for a loan with multiple lenders and compare rates and loan features. You can pre-qualify on NerdWallet and see rates from lenders that partner with us.