 TITLE: What’s a Good Personal Loan Interest Rate? CONTENT: What Affects Personal Loan Interest Rates?\n------------------------------------------\nPersonal loans are considered unsecured debt, which means there is no collateral, such as a home or car, to back the loan. That can account for why your personal loan interest rate may be higher than the rate for your mortgage or auto loan. Personal loans also generally use the term APR, or annual percentage rate, to refer to additional loan costs beyond the principal balance. This number includes the fees you'll pay in addition to interest.\nOne of the biggest factors contributing to the interest rate you'll receive is your credit score. With a higher credit score—as close to 850 as possible in most scoring models—you'll have the best chance at lower rates. High credit scores, in lenders' eyes, correlate to less risk; if you have a history of making on-time payments and avoiding taking on more debt than you can afford, you're more likely to pay off your personal loan as agreed.\nLenders will also look at your debt-to-income ratio, or DTI, which is calculated by dividing the total debt payments you make each month by your gross monthly income. Debts included in the DTI calculation include student loans, credit card bills, auto loans, mortgages and existing personal loans. A lower DTI means you have more room in your budget to take on a new payment, and may mean a lower interest rate.\nIf you can't qualify for a personal loan on your own, or you want a lower interest rate, some lenders also allow you to apply with a creditworthy cosigner. That person will have to apply along with you, and the lender will assess their credit score, DTI, annual income and ability to repay the loan. That's because if you can't make payments, your cosigner will be responsible for them. Make sure you both understand that, and are comfortable with the loan's repayment terms, before moving forward. END