Interest rates for personal loans have hit record lows amidst the ongoing COVID-19 pandemic, as lenders seek to attract borrowers in a challenging economic environment. Many consumers have been struggling to make ends meet due to job losses, reduced income, and other financial difficulties.
According to a recent report by Bankrate, the average interest rate for a 24-month personal loan has fallen to just 9.36%, down from 12.06% in 2019. Similarly, the average interest rate for a 60-month personal loan has dropped to 15.22%, compared to 18.28% in 2019.
The low interest rates are a boon for borrowers looking to consolidate debt, cover unexpected expenses, or finance home improvements. However, experts caution that consumers should still exercise caution when taking out personal loans, as they can carry high fees and interest charges, and can lead to long-term debt if not managed carefully.
Lenders have also tightened their lending criteria in response to the economic uncertainty caused by the pandemic. Many banks and credit unions are requiring higher credit scores and income levels, and may be more cautious about lending to borrowers with unstable employment or income.
Despite these challenges, the low interest rates are expected to continue for the foreseeable future, as lenders compete for market share and seek to support consumers in a difficult economic environment. For borrowers who can qualify, personal loans can be a valuable tool for managing financial challenges and taking advantage of low-cost credit. However, it's important to carefully consider the terms and conditions of any loan, and to have a solid plan for paying it back.