Can the Lender Change the Interest Rate on My Personal Loan?
- Personal loans normally have fixed interest rates that don’t change.
- If you want to get a lower interest rate, you can try to refinance your personal loan.
- The interest rate is different from (and sometimes lower than) the APR, which represents the total cost of the loan, including interest and fees.
Reasonable interest rates are one of the main benefits that personal loans offer. On average, personal loan rates are about 10% lower than credit card rates, according to the Federal Reserve. That’s a sizable difference, and it’s why using a personal loan for debt consolidation is often a smart move. You could save quite a bit on interest, especially when you consolidate credit card debt.
If you have a personal loan, or you’re thinking about getting one, you may be wondering if the interest rate is guaranteed as long as the loan lasts. This is a good question to ask so you know exactly what to expect from your loan.
Can the Lender Change the Interest Rate on My Personal Loan?
A lender normally can’t change the interest rate on a personal loan during the loan term. Most personal loans have fixed interest rates. A fixed rate stays the same for the life of the loan, so there are no surprises. From the start, you know your loan’s interest rate, monthly payment amount, and how long it will take to pay back.
To find out if your loan has a fixed rate, check your loan agreement. If you haven’t applied for a loan yet, you can usually find out if a lender offers fixed-rate loans by checking its website. You can also contact the lender directly to ask if its personal loans have fixed interest rates.
There are a couple of situations where your interest rate on a personal loan could change: if you have a variable-rate loan or if you refinance.
Variable-rate loans
A variable rate is an interest rate that can go up or down over time. Variable interest rates are usually tied to a benchmark rate. For example, a variable rate could be connected to the federal funds rate, which is an interest rate set by the Federal Reserve.
The lender can make rate changes with this type of loan, but it can’t just change the variable rate to whatever it wants. It makes rate changes based on movement in the benchmark rate.
When it comes to personal loans, fixed rates are the norm. Variable rates are more common with other types of financial products. Almost all credit cards have variable rates, and so do some mortgages—these are called adjustable-rate mortgages.
Personal loan refinancing
Refinancing a personal loan changes the interest rate you pay. When you refinance, you get a new personal loan to pay off the old one. The most common reason to refinance debt is to get a better deal, such as a lower interest rate or a cheaper monthly payment.
It’s not entirely accurate to say that your personal loan’s interest rate changes after refinancing. You’re replacing your original personal loan, and your new loan has its own interest rate. But that’s more of a technical detail. You’ll be paying a different interest rate, and most likely a lower one. It rarely makes sense to refinance and pay more.
Why Is My Personal Loan’s Interest Rate Different From the APR?
The annual percentage rate (APR) on a loan can be a little confusing. You might notice that your personal loan has an interest rate but also an APR, which is higher. The lender hasn’t changed anything, as these are two different types of rates. Here’s the difference:
The interest rate is the percentage charged every year for interest.
The APR is the total annual cost of the loan, including interest and any other fees the lender charges.
For example, some lenders charge an origination fee when you take out a personal loan. Origination fees depend on the lender, with 1% to 10% of the loan being the usual range. If your personal loan has an origination fee, the APR will include this fee. The interest rate won’t.
Imagine you get a $10,000 personal loan for five years. Your loan has a 10% interest rate and a 5% origination fee ($500). Because of that origination fee, the cost of your loan for a year would be about 12%, or 2% higher than just the interest rate.
How to Get Rid of Expensive Debt
If you’re having trouble keeping up with debt payments, debt consolidation is one potential solution. You could see if you qualify for a personal loan with a lower interest rate than your current debt. This can help when the debt is still manageable.
However, debt consolidation doesn’t work for everyone. People with low credit scores or large amounts of debt could struggle to qualify for a personal loan. And if your debt is far too expensive to fit your budget, consolidating it might not be enough.
In this situation, consider working with a debt relief program. A professional debt settlement company can negotiate with creditors and debt collectors on your behalf. Instead of juggling payments, you could make one affordable monthly deposit until you have a debt settlement agreement. After you finish the debt relief program, you can build a better financial future without costly debt holding you back.
Debt relief by the numbers
We looked at a sample of data from Freedom Debt Relief of people seeking credit card debt relief during January 2026. This data reveals the diversity of individuals seeking help and provides insights into some of their key characteristics.
FICO scores and enrolled debt
Curious about the credit scores of those in debt relief? In January 2026, the average FICO score for people enrolling in a debt settlement program was 593, with an average enrolled debt of $25,843. For different age groups, the FICO scores varied. For instance, those aged 51-65 had an average FICO score of 588 and an enrolled debt of $27,829. The 18-25 age group had an average FICO score of 556 and an enrolled debt of $17,051. No matter your age or debt level, it's reassuring to know you're not alone. Taking the step to seek help can lead you towards a brighter financial future.
Home-secured debt – average debt by selected states
According to the 2023 Federal Reserve Survey of Consumer Finances (SCF) (using 2022 data) the average home-secured debt for those with a balance was $212,498. The percentage of families with mortgage debt was 42%.
In January 2026, 25% of the debt relief seekers had a mortgage. The average mortgage debt was $236504, and the average monthly payment was $1882.
Here is a quick look at the top five states by average mortgage balance.
| State | % with a mortgage balance | Average mortgage balance | Average monthly payment | |
|---|---|---|---|---|
| California | 20 | $391,113 | $2,710 | |
| District of Columbia | 17 | $339,911 | $2,330 | |
| Utah | 31 | $316,936 | $2,094 | |
| Nevada | 25 | $306,258 | $2,082 | |
| Massachusetts | 28 | $297,524 | $2,290 |
The statistics are based on all debt relief seekers with a mortgage loan balance over $0.
Housing is an important part of a household's expenses. Remember to consider all your debts when looking for a way to get debt relief.
Manage Your Finances Better
Understanding your debt situation is crucial. It could be high credit use, many tradelines, or a low FICO score. The right debt relief can help you manage your money. Begin your journey to financial stability by taking the first step.
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Author Information
Written by
Lyle Daly
Lyle is a financial writer for Freedom Debt Relief. He also covers investing research and analysis for The Motley Fool and has contributed to Evergreen Wealth and Monarch Money.
Reviewed by
Kimberly Rotter
Kimberly Rotter is a financial counselor and consumer credit expert who helps people with average or low incomes discover how to create wealth and opportunities. She’s a veteran writer and editor who has spent more than 30 years creating thousands of hours of educational content in every possible format.
Can my lender increase my personal loan rate if I miss a payment?
Your lender probably can’t increase your personal loan rate if you miss a payment. Many cards have a penalty APR, but the same isn’t true with personal loans. While the lender may charge you a late fee, your loan’s interest rate should stay the same. To be sure, review your loan agreement to see if it says anything about rate increases.
What’s the difference between a fixed and a variable interest rate on a loan?
A fixed interest rate remains the same for the duration of the loan. A variable interest rate can change based on the movement of a benchmark rate.
Can I negotiate a lower interest rate on my personal loan?
You may be able to negotiate a lower interest rate on your personal loan. Lenders will sometimes work with you, especially if you’re going through a financial hardship. If not, another way to get a lower interest rate is to refinance your personal loan.