While most personal loan interest rates are fixed, federal rate changes and inflation do impact interest rates for new loan borrowers, although indirectly.
As the cost of living rises and more Americans take on personal loan debt, it is important for consumers to understand how inflation and federal rate changes can affect their loans. Understanding current interest rate statistics and personal loan information can help you better plan for your own borrowing needs and get the best out of your loan.
Bankrate’s take: Before borrowing money, use a personal loan calculator to see what rates and terms work best for your budget.
The average personal loan interest rate is 12.20%.
Bankrate’s lenders have interest rates ranging from 6.24% to 35.99%.
The average personal loan debt per borrower in the U.S. in September 2025 was $11,724.
U.S. inflation is currently sitting at 3% month over month.
The Federal Reserve has dropped the federal funds rate three times in 2025.
The current federal funds target rate is 3.5 to 3.75%.
Credit score, loan amount and lender may influence the interest rate. Prequalifying for a personal loan will give you the best idea of your individual rate.
Interest rates for personal loans, mortgages, auto loans and other financing products are determined, in part, by decisions from the Federal Reserve (the Fed) to raise or lower the federal funds rate. When the funds rate goes up, interest rates tend to rise, making it cost more to borrow money. You’ll pay more each month, and you’ll pay more in total interest over the life of the loan.
You can often tell when something major has happened in the country by the way rates react. Typically, something that jolts the economy — like a recession or global event — prompts the Fed to drop the federal funds rate to help it recover. Over time, rates may increase or plateau as the economy gets better.
Just look at the last 20 years: As the country recovered from the Great Recession, the Fed dropped rates to help stimulate the economy, causing the average personal loan rate to drop. Rates fell again during the pandemic, rebounded in its aftermath, and have since stabilized and begun inching downward.
Credit score can impact the interest rate you get on a personal loan. Since credit scores help show how someone handles their debt, lenders use them to determine the risk of lending money to a borrower. The higher your credit score, the better your rate may be.
Bankrate’s take: A lower loan amount or shorter repayment term poses less risk to a lender. The less you borrow and the quicker you can pay it back, the lower your rate could be.
The interest rate you qualify for depends on your credit score and financial background, but it also depends on the type of lender you choose.
Banks tend to have the highest interest rates and strictest eligibility requirements because these institutions are so highly regulated. Average credit union rates are typically lower since they require membership to apply for loan products. However, online lenders typically have the lowest rates of all, as well as the most lenient eligibility requirements. However, they also have some of the highest maximum APRs.
Average personal loan rate among all lenders: 12.20%.
Average personal loan rate at credit unions: 10.72%.
Average personal loan rate at commercial banks: 12.06%.
Personal loan rates at online lenders: 6.24% to 35.99%.
According to the TransUnion industry snapshot for September 2025, online lenders are the most popular option, with 48.6% of borrowers using fintech lenders, 21.6% using banks and 20.3% using credit unions.
Most personal loans come with fixed interest rates. Variable rates on personal loans are very rare. Fixed-rate personal loans have the same interest rate over the life of the loan, meaning that you do not have to worry about your rate going up once you are locked into the loan. Fixed rates are generally preferred because they are more predictable. That’s why debt consolidation loans can help you better manage high, variable-rate credit card debt.
According to TransUnion’s industry snapshot, the average personal loan balance per consumer is $11,724. The average new personal loan account balance is $6,487.
The average personal loan balance per bank consumer is $12,280.
The average personal loan balance per credit union consumer is $8,515.
The average personal loan balance per fintech consumer is $13,637.
Some of the highest new balances are located on the East Coast, where the cost of living is typically higher than many other parts of the United States.
It’s important to understand interest rates because they influence how much you’ll pay each month and how much you’ll pay in interest over the life of the loan. That’s how much you pay over the amount you originally borrowed.
For example, using the average personal loan balance in the U.S., $11,704, and a repayment term of five years, you can see that a higher interest rate can cost thousands of dollars.
Loan amount | Loan term | Interest rate | Monthly payment | Total interest paid |
$11,704 | 5 | 7% | $232 | $2,201 |
$11,704 | 5 | 10% | $249 | $3,217 |
$11,704 | 5 | 15% | $278 | $5,002 |
$11,704 | 5 | 20% | $310 | $6,901 |
The interest rate on a personal loan impacts how much you’ll pay each month and over the life of the loan. Understanding what affects the interest rate you’ll get on your loan will help you know what to expect when you start shopping for personal loans. Getting the lowest interest rate possible can help save you thousands of dollars in the long run.
