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Personal loan rates have fallen. But is a personal loan right for you?

MarketWatch logo MarketWatch 6/22/2022 Alisa Wolfson
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Average personal loan rates have fallen. Average rates for 5-year personal loans decreased to 18.77%, and 3-year personal loans rates fell to 20.65% compared to a week prior. If you have excellent credit, you’ll likely pay far less, with average 5-year personal loan rates for those with very high credit scores sit at 13% and for 3-year personal loans 11.98%, according to Bankrate’s most recent data for the week ending June 20. You can see the lowest personal loan rates you qualify for here.

Pros say personal loans can be a decent option for consolidating high-interest debt or paying for emergency expenses that you don’t have the savings to fund — assuming, of course, that you get a decent rate on the loan. They’re also handy when you need money quickly, as some personal loans can fund in as little as a day and usually don’t require a borrower to put down any collateral.

That said, they tend to have higher rates than home equity loans and HELOCs (see the lowest home equity rates you can get here). What’s more, because personal loans can be so easy to get your hands on, it may be tempting to take out more than you need. But experts caution against that as it can be expensive, and not repaying a personal loan may hurt your credit score.

To get the best rates and terms on a personal loan, make sure your credit score is as high as you can get it, your finances are in order and that you get quotes from a few different lenders.

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