Personal loan rates are so high because the Federal Reserve has increased its target interest rate 11 times since early 2022 in response to high inflation. The interest rates on personal loans tend to go up when the Fed raises its rate.
Personal loan rates also tend to be higher than interest rates for secured loans like mortgages and auto loans because most personal loans are not backed by collateral. For example, the average personal loan rate is around 5-8% higher than the average mortgage rate.
Average Personal Loan Rate by Year, 2003 – 2023
| Year | Average Personal Loan Rate by Year |
| 2023 | 11.87% |
| 2022 | 9.87% |
| 2021 | 9.38% |
| 2020 | 9.51% |
| 2019 | 10.32% |
| 2018 | 10.32% |
| 2017 | 10.13% |
| 2016 | 9.69% |
| 2015 | 9.75% |
| 2014 | 10.23% |
| 2013 | 10.20% |
| 2012 | 10.71% |
| 2011 | 10.88% |
| 2010 | 10.87% |
| 2009 | 11.10% |
| 2008 | 11.37% |
| 2007 | 12.38% |
| 2006 | 12.41% |
| 2005 | 12.06% |
| 2004 | 11.89% |
| 2003 | 11.96% |
This data reflects the annual average finance rate on 24-month personal loans from commercial banks, according to the U.S. Board of Governors of the Federal Reserve System.
As you can see, personal loan rates haven’t always been as high as they are now. If you don’t want to wait for rates to subside in general, there are still some things you can do to minimize the cost of a loan.
Tips to Getting a Lower Personal Loan Interest Rate
- Compare rates. Compare rates. Take advantage of WalletHub’s rate comparison tool to shop around for the best rates.
- You can use WalletHub’s prequalification tool to estimate your chances of getting approved and the loan rates you might be offered, which can help you pick the lender with the best terms for you.
- Adjust your loan term and amount. A shorter repayment plan or lower loan amount may help you get a lower interest rate.
- Get a co-signer or co-borrower. If your co-signer or co-borrower has a better credit score, they may be able to help you qualify for a lower interest rate.
- Raise your credit score. Lowering your debt-to-income ratio, keeping your credit accounts in good standing, and practicing other smart strategies can help give you the best shot at qualifying for lower rates.
You can join WalletHub to check your credit score for free and get personalized recommendations about how to improve your credit.
This answer was first published on 01/12/24 and it was last updated on 04/08/24. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.
