Most personal loans carry fixed interest rates, yet changes in federal rates and inflation indirectly affect rates for new borrowers. As living costs increase and more Americans accumulate personal loan debt, consumers are noting the connection between these economic factors and their loan terms.
The average personal loan interest rate currently stands at 12.19%. Rates from Bankrate's lenders range from 6.24% to 35.99%. In September 2025, the average personal loan debt per borrower in the U.S. was reported at $11,724. U.S. inflation is measured at 3% month over month.
The Federal Reserve has reduced the federal funds rate three times during 2025. The current target rate is set between 3.5% and 3.75%. Interest rates for personal loans, along with mortgages and auto loans, are partly determined by such Fed decisions. When the funds rate rises, borrowing costs typically increase, leading to higher monthly payments and total interest over a loan's term.
Over the past two decades, average personal loan rates dropped as the country recovered from the Great Recession, with the Fed lowering rates to stimulate the economy. Rates fell again during the pandemic, rebounded afterward, and have since stabilized, beginning a slight downward trend.
Credit score, loan amount, and lender choice influence the interest rate a borrower receives. Higher credit scores generally lead to better rates. Prequalifying for a loan provides the clearest indication of an individual's rate.
Bankrate suggests using a personal loan calculator before borrowing to identify suitable rates and terms. A lower loan amount or shorter repayment term poses less risk to lenders, potentially resulting in a lower rate.
The interest rate depends on the lender type. Banks often have the highest rates and strictest requirements due to regulation. Credit unions typically offer lower rates, requiring membership. Online lenders usually have the lowest rates and most lenient requirements, though they also feature some of the highest maximum APRs.
Average personal loan rates vary: 12.19% across all lenders, 10.72% at credit unions, 12.06% at commercial banks, and 6.24% to 35.99% at online lenders. According to TransUnion's September 2025 industry snapshot, online lenders are the most popular, used by 48.6% of borrowers, compared to 21.6% for banks and 20.3% for credit unions.
Most personal loans have fixed rates, with variable rates being rare. Fixed rates remain constant over the loan's life, offering predictability. This stability makes them preferable for managing variable-rate debts like credit cards.
TransUnion data shows the average personal loan balance per consumer is $11,724, with new accounts averaging $6,487. Balances differ by lender: $12,280 per bank consumer, $8,515 per credit union consumer, and $13,637 per fintech consumer. Some of the highest new balances are found on the East Coast, where living costs are typically elevated.
Interest rates determine monthly payments and total interest paid over a loan's term. For example, on a $11,704 loan over five years, a 7% rate yields a $232 monthly payment and $2,201 total interest, while a 20% rate results in a $310 payment and $6,901 total interest.