5 Ways to Get A Lower Interest Personal Loan

Key takeaways:

The five ways to obtain a lower interest rate on a personal loan can include choosing a shorter repayment term, improving your debt-to-income ratio, exploring collateral options, shopping around for loans, and working on improving your credit.
Through these strategies, you can potentially save money on interest over the loan’s terms.
A borrower can take control of some factors that impact interest rates, and secure the best possible rate for their personal loan.

Most lenders have a range of interest rates they offer to borrowers. As of this writing, Upstart’s marketplace offers fixed interest rates on personal loans originated on its platform.

Obviously, a lower interest rate is preferable to a higher one, and even a seemingly small difference can save you significant money over the term of a personal loan. For example, on a $20,000 personal loan with a 5-year term, a 15% APR can save you more than $3,200 in interest compared to the same loan with a 20% APR.

5 ways to get a lower interest personal loan

There are some components of personal loan interest rates that are obviously out of your control, such as market conditions. The Federal Reserve has raised benchmark interest rates aggressively since inflation started to rise, and this has pushed most consumer interest rates higher as well, including those on personal loans. So, even borrowers with top-tier qualification can get interest rates as low as those available just a couple of years ago.

Having said that, there are several strategies you can use to make sure you get the lowest interest rate possible on a personal loan, and here are 5 of the most effective.

1. Use a shorter loan term

You might be familiar with the concept that a 15-year mortgage will generally have a lower interest rate than a 30-year loan, all other factors being equal. What you might not realize is this applies to personal loans as well. As a general rule, the shorter the repayment term, the lower the interest rate.

For example, if you can afford to repay your personal loan in three years instead of five, choosing the three-year repayment option could potentially get you a lower interest rate. When you view your loan offers, be sure to compare different term lengths.

2. Improve your DTI ratio

In addition to your credit history and loan term length, one of the biggest factors lenders use when determining your interest rate is your other debts. One metric that is commonly used is known as the debt-to-income, or DTI ratio. You can calculate yours by adding up your monthly debt payments (mortgage, auto loan, credit cards, etc.) and dividing the total by your pre-tax monthly income. For example, if your monthly payments are $2,000 and you earn $5,000 per month, your DTI ratio is 40%.

There’s no specific cutoff regarding what DTI ratio is considered “too high” but mortgage lenders typically consider 45% as the highest they’ll accept when making a loan. But if yours is a bit on the high side, it might be a smart idea to work on reducing it—maybe try to pay off your lowest-balance credit cards over the next few months.

3. Explore your collateral options

Most personal lenders and lending marketplaces (including Upstart) originate unsecured personal loans¹, but there are some that allow you to pledge collateral. In exchange for this, you may be able to get a better interest rate. Just be aware that if you pledge a certain asset—such as your car—and you can’t make your personal loan payments, the lender will be legally able to repossess it.

4. Shop around for a loan

Most major personal loan lenders and lending platforms allow you to check your personalized rate offers with no impact to your credit score, and all it takes is filling out a quick and easy form. So, you have no reason not to check your rate offers at several different personal loan companies to find the best deal. You might be surprised at how different loan offers can be for the exact same borrower, especially if your credit history isn’t ideal.

5. Work on your credit

This one is clearly not a quick fix, but your credit history is usually the largest factor that determines your personal loan interest rate. Great credit takes years to build, but you might be surprised at how much of an impact you can have in a short time period. Just a couple of tips to boost your score relatively quickly:

Pay down some of your credit card debt. This reduces the percentage of your available credit you’re using, which is one of the biggest factors in the credit scoring formulas. As an alternative, you could also ask your creditors for higher limits, which would have the same basic effect.
Don’t apply for any new credit. New credit accounts and inquiries (credit applications) have a negative effect on your credit score, but only inquiries within the past 12 months count in the FICO score formula. By allowing old inquiries to fall off and recently opened accounts to age, it can positively impact your score.

The bottom line on low interest personal loans

In several ways, the interest rates you can get on personal loans are out of your control, and other factors (such as excellent credit) can take a long time. However, there are several strategies you can use that might get you a significantly lower interest rate on your next personal loan.

¹ While most loans through Upstart are unsecured, certain lenders may place a lien on other accounts you hold with the same institution. It is important to review your promissory note for these details before accepting your loan.

Upstart Network, Inc. (NMLS #936133) is not a lender. All loans on its marketplace are made by regulated financial institutions.

All mortgage lending is conducted by Upstart Mortgage, LLC dba Upstart Home Lending. (NMLS #2443873). Equal Housing Opportunity.

Checking your rate won’t affect your credit score: When you check your rate, we check your credit report. This initial (soft) inquiry will not affect your credit score. If you accept your rate and proceed with your application, we do another (hard) credit inquiry that will impact your credit score. If you take out a loan, repayment information may be reported to the credit bureaus.
Upstart’s model considers education: Neither Upstart nor its lending partners have a minimum educational attainment requirement in order to be eligible for a loan.
41% more approvals and 33% lower rates than a traditional model: As of publication in April 2026, and based on a comparison between the Upstart model and a hypothetical traditional model using Upstart data from Jan – Dec 2025. For more information on the methodology behind this study, please see Upstart’s Annual Access to Credit results here.
Unsecured Loans: While most loans through Upstart are unsecured, certain lenders may place a lien on other accounts you hold with the same institution. There may be an option to secure your personal loan through Upstart with your vehicle, which will require a lien to be placed on the vehicle. It is important to review your promissory note for these details before accepting your loan.
Loan amounts from $1,000 -$75,000: Your loan amount will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will qualify for the full amount. Minimum loan amounts vary by state: GA ($3,100), HI ($1,500), MA ($7,000). Maximum loan amounts may vary by state.
Closing and funding timeline: In April 2026, 10% of funded HELOCs achieved a closing timeline of 2 days or less and a funding timeline of 7 days or less. This timeline assumes consumers close with our remote online notary, provide supporting documentation promptly, and ensure the information provided is accurate and consistent with our verification process. Delays, discrepancies, and other unforeseen factors may impact the closing timeline. MBA’s 2025 Home Lending Study reports an average industry closing time of 37 days.
APRs from 6.2% – 35.99%, with 3 or 5 year terms: The full range of available rates varies by state. The lowest rates are only available to the most qualified applicants. A representative example of payment terms for an unsecured Personal Loan is as follows: a borrower receives a loan of $10,000 for a term of 60 months, with an interest rate of 17.50% and a 7.25% origination fee of $725, for an APR of 21.23%. In this example, the borrower will receive $9275 and will make 60 monthly payments of $252. APR is calculated based on 5-year rates offered in March 2026. There is no downpayment and no prepayment penalty. Your APR will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will be approved.
Instant deposits: To receive instant funding, your bank account must support instant transfers. If your account does not support instant transfers, funds will be available to you depending on your bank’s transaction processing time and policies.
Always On Commitment: We are committed to maintaining your credit limit as long as you continue to meet program eligibility and account requirements. To ensure the safety and security of all our members, we reserve the right to adjust or close lines in specific circumstances, including account default or late payments, suspected fraud, violation of our terms of service (including abusive behavior), or when necessitated by legal or regulatory requirements.
Cash Line draws: You may request a draw at any time. Only one draw may be outstanding at a time; after it is fully repaid, you may request another.
HELOC APRs as low as 6.52%: Terms shown here are subject to change without notice. APRs for initial advances range from 6.52% to 18.00% based on rates offered as of April 2026. The lowest rate is only available to consumers willing to become a member of a credit union and to those who meet a minimum FICO score of 780, CLTV under 70%, and DTI under 45%. Your actual rate will depend on many factors such as your credit history, combined loan-to-value ratio (CLTV), line amount, loan term, lien position, and property state. Origination fee to open an account is between 0% and 4.99% of the approved credit limit. The Annual Percentage Rate (“APR”) is variable and based on the Prime Rate as published in the Wall Street Journal “Money Rates” table plus or minus a margin. Your APR will never be less than 3.99% or greater than 18.00%. Property insurance is required.
No annual fee, prepayment penalty, or fees to redraw: Terms shown here are subject to change without notice. Origination fee to open an account is between 0% and 4.99% of the approved credit limit. The Annual Percentage Rate (“APR”) is variable and based on the Prime Rate as published in the Wall Street Journal “Money Rates” table plus or minus a margin. Your APR will never be less than 3.99% or greater than 18.00%. Property insurance is required.
2,500+ Variables:As of 3/31/2026. “Variables,” often also referred to as “features,” refers to raw variables and combined variables considered in our AI models. A “raw” variable is a non-combined, conceptually distinct unit of data, such as “applicant-reported savings.” A “combined” variable is data that has been transformed, combined, or otherwise engineered from a raw variable or set of raw variables, such as “applicant-reported savings” divided by “loan amount.
Fully automated loans: In Q2 2026. Percentage of Loans Fully Automated, which is defined as the total number of loans in a given period originated end-to-end (from initial rate request to final funding for personal loans and small dollar loans, and from initial rate request to signing of the loan agreement for auto loans) with no human involvement required by the Company divided by the Transaction Volume, Number of Loans in the same period.