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If you lack the funds to make a large purchase or need an extra monetary hand for an emergency or to consolidate debt, getting a low-interest-rate loan will make a huge difference and save you money. Now, it can be hard to know where to shop to find your best rate. Although excellent credit and high incomes can influence the likelihood of a low rate, there are plenty of banking options providing personal loans with different perks and incentives. To determine the best low interest rate loans of 2020, we compared various lender’s interest rates, loan terms, customer satisfaction, customer support and fees using our proprietary SimpleScore methodology.
Check Your Personal Loan Rates
Answer a few questions to see which personal loans you pre-qualify for. It’s quick and easy, and it will not impact your credit score.
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LightStream is part of SunTrustBank, now known as Truist. This bank offers personal loans for a range of different needs, whether it’s paying for medical bills, home improvements or buying a vehicle. Overall, LightStream offers personal loans with low-interest rates, but a personal credit score of 660 is required.
You will be able to lend up to $100,000, depending on your circumstances. To sweeten the deal, LightStream offers a $100 money-back satisfaction guarantee if you are unhappy with your loan during the first 30 days. LightStream loans will also beat any competitor’s interest rate by 0.10% with approval evidence.
Disclaimer: Your loan terms, including APR, may differ based on loan purpose, amount, term length, and your credit profile. Excellent credit is required to qualify for lowest rates. Rate is quoted with AutoPay discount. AutoPay discount is only available prior to loan funding. Rates without AutoPay may be higher. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice.
Payment example: Monthly payments for a $10,000 loan at 4.99% APR with a term of 3 years would result in 36 monthly payments of $299.66
As the lending division of Goldman Sachs, Marcus provides flexible personal loans. The main benefit of Marcus loans is that they come without extra fees added on top. You won’t have to pay any origination, prepayment or late fees for these loans. This makes Marcus loans a lot more affordable than other lenders, especially with the fairly low-interest rates. However, the low-interest is subject to a credit score of 660 or above.
Marcus even gives you the option to defer one payment if you have 12 months of consecutive monthly payments on your record. This simply extends your loan for an additional month, but no extra interest is charged.
Your loan terms are not guaranteed and are subject to our verification of your identity and credit information. To obtain a loan, you must submit additional documentation including an application that may affect your credit score. The availability of a loan offer and the terms of your actual offer will vary due to a number of factors, including your loan purpose and our evaluation of your creditworthiness. Rates will vary based on many factors, such as your creditworthiness (for example, credit score and credit history) and the length of your loan (for example, rates for 36 month loans are generally lower than rates for 72 month loans). Your maximum loan amount may vary depending on your loan purpose, income and creditworthiness. Your verifiable income must support your ability to repay your loan. Marcus by Goldman Sachs is a brand of Goldman Sachs Bank USA and all loans are issued by Goldman Sachs Bank USA, Salt Lake City Branch. Applications are subject to additional terms and conditions.
USAA Bank provides a range of banking services for military personnel and their families. This covers those in the U.S. Army, Air Force, Marines, Navy, Coast Guard, National Guard and the Reserves. Military members can access services such as mortgages, insurance, savings accounts and personal loans.
USAA Bank offers competitive interest rates on personal loans and fast access to cash. The great thing about USAA Bank loans is that there are no hidden fees such as application or origination fees. USAA also promises customers a 0.25% discount if you set up automatic repayments, which can help you further save money on your loans.
SoFi is a digital lender that offers personal loans, mortgages and student loan refinancing. These loans come without any hidden fees such as prepayment, origination or late-payment fees. When it comes to the application, SoFi considers individual factors like estimated cash flow and education.
Should you lose your job, SoFi has support in place with a special forbearance deal to temporarily pause your loan repayments. This makes it a much more attractive option for those who want a bit of extra security. However, interest does still accrue during this period.
Low-interest personal loans with unemployment protection.
Fixed rates from 5.99% APR to 18.28% APR (with AutoPay). SoFi rate ranges are current as of October 5, 2020 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, income, and other factors. See APR examples and terms. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.
Also known as Banknorth, TD Bank offers a range of banking products ranging from savings accounts to mortgages and personal loans. TD Bank’s personal loans come with fixed interest rates, monthly payments and a fixed repayment schedule. This is great for those who want a clear idea of how much they will need to pay and at what time, with no fluctuations in interest rates to worry about.
TD Bank loans come with no hidden fees and access to funding within as little as 48 hours. If you are a current customer of TD Bank and set up automatic payments, you could also get a 0.25% discount on your loan APR.
A popular personal loan provider with fast access to cash.
U.S. Bank provides a variety of banking products including mortgages, investment accounts and personal loans. Their personal loan can be used for debt consolidation or to make a major purchase. U.S. Bank’s personal loans have a simple application process that provides fast funding, usually within a day.
The primary benefit of U.S Bank loans is that they offer some of the lowest rate loans, fixed interest and monthly payments. This means you always know exactly how much you will owe during the entire loan period. As no collateral is required, this makes it a more flexible option for those struggling to get loans elsewhere.
Low-interest loans with a simple application for finance.
What is a low-interest personal loan?
A low-interest personal loan is a short-term loan offered by banks, online lenders and credit unions, where the interest rate is charged at a much lower percentage (typically below 12 percent). These loans come with fixed amounts and a defined payoff timeline. Since these loans are often the most competitive to qualify for, expect to pay less over the life of the loan.
Due to their hiring borrowing limits, low-interest personal loans are helpful for large purchases such as buying a vehicle or renovating a home. Interest rates vary with each lender and they will be assessed on several different factors, including your credit score, the loan amount, your employment status and your income.
How low-interest personal loans work
Low-interest rate loans charge a low fee for the cost of taking out the loan. This cost is added as interest on top of the loan repayments each month. Therefore, whenever you search for a new loan, the interest rate is one of the main things to consider before making a final decision.
You can always shop around for better interest rates as each lender may offer a unique rate and fee structure. Here are some other things to consider:
APR stands for the annual percentage rate and consists of the loan’s annual cost with fees added on. This is slightly different from interest rates, which represent the yearly cost of taking out the loan. Therefore, APR is a broader figure that shows what you’ll be paying, which you can also use to make comparisons between lenders.
This means lenders will require repayment of the loan over different time limits. For example, some loans will have two to seven-year repayment terms. Repayment terms will be discussed with you while you are going through the loan application. Generally, the longer the loan term, the more interest you will need to pay overall.
Each lender will have minimum and maximum amounts that you can borrow from them, with most lenders requiring you to borrow at least $1,000. The maximum amounts will vary, but in some cases, they can be up to $100,000.
How much you can take out in a loan will depend on your credit score, employment status, requested amount and the purpose of the loan. Customers deemed as low risk by the lender will typically get more favorable rates and loan amounts.
Check Your Personal Loan Rates
Answer a few questions to see which personal loans you pre-qualify for. It’s quick and easy, and it will not impact your credit score.
How to choose the best low-interest personal loan for you
When it comes to choosing the best low-interest personal loan, there are many factors to consider.
1. Credit requirements
Your credit score will determine whether you qualify for a loan or not and the interest rates you will be offered. It’s a good idea to check the credit requirements of various loans and providers to see if you are eligible.
2. Look at borrowing limits
Different lenders will have different borrowing limits and minimum loan amounts. This is a good way to narrow down your search and you’ll quickly find that some lenders will be better suited to you than others.
3. Check loan terms
The length of time you can repay your loan over is another important factor to help you choose the best low-interest loans. Some lenders will be flexible and let you repay over 7 years, whereas others will have shorter loan terms. It’s also important to check the additional interest rates for longer-term loans.
4. Choose either a secure or unsecured loan
Many lenders will offer a choice of secured or unsecured loans. Secured loans require an asset as collateral, which acts as security for the lender if you can’t pay back the loan.
Unsecured loans don’t require collateral. Therefore, your preference here will determine which lenders are best to look at. Some lenders will only supply secured loans, while others will offer both.
5. Look for hidden fees
Some lenders promise no hidden fees, making them a preferable option that could save you money. Make sure you always check whether there will be additional fees before you sign up for a loan.
Low-interest personal loan FAQ
Lenders may have different requirements. However, most will need proof of income, a Social Security number, existing debt details, your rental/home-ownership situation and details of your employment.
Higher credit scores do offer a broader range of interest rates. The best applicants always pose less risk and their credit score is prove they can pay back what they borrow. But, as personal loan offerings grow in the U.S., potential borrowers can find options like bad credit loans that in the long run, can likely improve poor credit scores.
Applying for a personal loan is fairly straightforward and fast these days. Typically, people look to banks and credit unions first because you’re likely to meet face to face with a loan officer and the experience can be more personalized. But due to current social distancing restrictions, online shopping is highly recommended. Many lender websites will let you apply online within minutes and help you determine if you’re financial profile makes you eligible for a loan.
If you are worried about repayments, consider talking to your lender about making a later payment. Another option is to look into consolidating or refinancing your loan. If you are going through a serious situation, some lenders will offer help in the case of emergencies such as sudden unemployment.
Too long, didn’t read?
When searching for the best low-interest loans you will need to look at your credit score, loan terms, APR, hidden fees, interest rates and more. Whether you are approved for a loan will depend on your personal circumstances so be sure to check eligibility criteria first. There are several lenders to choose from which offer low-interest rates loans. However, a good credit score is crucial if you want to get the best low-interest rates on personal loans.
We welcome your feedback on this article and would love to hear about your experience with the personal loans we recommend. Contact us at firstname.lastname@example.org with comments or questions.
The SimpleScore is a proprietary scoring metric we use to objectively compare products and services at The Simple Dollar.
For every review, our editorial team:
Identifies five measurable aspects to compare across each brand
Determines the rating criteria for each aspect score
Averages the five aspect scores to produce a single SimpleScore
Here’s a breakdown of the five aspect scores and their rating criteria for our review of the best personal loans of 2020.
Why do some brands have different SimpleScores on different pages?
To ensure the SimpleScore is as helpful and accurate as possible, we developed unique criteria for every category we compare at The Simple Dollar. Since most brands offer a variety of financial solutions, their products and services will score differently depending on what we’re scoring on a given page.
However, it’s also possible for the same product from the same brand to have multiple SimpleScores. For instance, if we compare NetCredit’s personal loans according to our criteria for the best personal loans, it scores a 2.3 out of 5. But when we compare NetCredit according to the criteria for the best bad credit personal loans, it scores considerably higher, since the criteria for the latter review are more lenient (lenders who serve borrowers with bad credit will always offer higher rates, so we needed to adjust our category methodology to account for different industry standards).
We looked at the maximum APR for each lender — the lower their maximum rate, the higher their score.
We awarded higher scores to lenders with more generous loan sizes.
We leveraged the J.D. Power 2019 Personal Loan Satisfaction Study℠ to see how customers rated their experience with each lender. (If a lender wasn’t included in J.D. Power’s study, we skipped this aspect and averaged the four remaining aspect scores.)
We awarded higher scores to lenders with the most channels for customer support.
We looked at the three most common fees — origination, late payment, and pre-payment — and penalized lenders for each fee charged.
Andrea Perez is an editor at The Simple Dollar specializing in personal finance. Prior to that she specialized in digital marketing content for online learning websites. She holds a master’s degree in journalism and media studies from the University of South Florida.