Interpolation will always lag a little bit behind but can be smoother than extrapolation.

	rigidbody.interpolation = RigidbodyInterpolation.Interpolate;

using UnityEngine;
using System.Collections;

public class Example : MonoBehaviour {
    void Example() {
        rigidbody.interpolation = RigidbodyInterpolation.Interpolate;
    }
}

import UnityEngine
import System.Collections

public class Example(MonoBehaviour):

	def Example() as void:
		rigidbody.interpolation = RigidbodyInterpolation.Interpolate