If you’re already planning to apply for a personal loan in the coming months, now is the time to save yourself a slightly higher interest rate.

Personal loan interest rates have been relatively low since the pandemic began, and even small increases can make a significant difference in how much interest you ultimately pay.

For example, a $15,000 personal loan paid over five years at an interest rate of 10% costs $4,122 in interest. The same loan at 12% interest costs $5,020.

Given the rising interest rate environment, Zhu says it now makes sense to take out a personal loan.

“If you have needs, I think it’s a good idea to set a relatively low interest rate,” he says.

However, borrowers who are unsure about getting a loan should not let impending rate hikes rush them into making a decision they are not ready to make.

Dan Herron, a board-certified financial planner based in San Luis Obispo, California, urges caution when considering personal loans, especially when there’s a chance of defaulting on your payments.

“As a consultant, I want my clients to make sure they fully understand the implications of this loan and what will happen if you don’t pay it back by a certain time,” he says.