A good Annual Percentage Rate (APR) for a personal loan depends heavily on your credit score. Borrowers with excellent credit (720+) can often find rates below 10%, while those with fair or poor credit may see rates of 20% or higher. Because these loans are unsecured, lenders place a heavy emphasis on your credit history when determining your rate.

Personal loans are very flexible and can be used for almost any purpose. Common uses include consolidating high-interest credit card debt into a single payment, financing home improvement projects, paying for unexpected medical bills, or covering costs for a wedding, vacation, or other large purchase. Most lenders have very few restrictions on how you can use the funds.

When you formally apply for a personal loan, the lender will perform a ‘hard inquiry’ on your credit report, which can cause a small, temporary drop in your credit score (typically less than five points). However, many lenders offer a ‘soft inquiry’ for pre-qualification, which does not affect your score and allows you to see what potential rates you might qualify for before committing to a full application.

A fixed-rate loan has an interest rate that stays the same for the entire life of the loan, meaning your monthly payment will never change. A variable-rate loan has an interest rate that can fluctuate over time based on market conditions. While variable rates might start lower, they carry the risk of increasing in the future, which would raise your monthly payment. Fixed-rate loans are more common and offer more predictable payments.