Is a 36% APR good?

The best personal loan interest rates vary a lot over time and depend on several factors, including the applicant’s credit score, income, monthly housing payment and existing debt obligations. The loan term and amount have an impact, too, as does the overall economic climate.

The average APR for a 24-month personal loan was 10.07% as of December 2019, according to the most recent data available from the Federal Reserve Bank of St. Louis. By definition, the best personal loan rates have to be below average, so 10% is a good benchmark to beat. That average has gone up a bit in recent years, after bottoming at 9.45% in Nov. 2016. But personal loans rates are still 50% lower than they were in the 1980s.… read full answer

Below, you can see some average personal loan interest rates broken down by credit score. You can check your latest credit score for free on WalletHub to find out exactly where you stand.

Average Personal Loan Rates by Credit Score

Source: LendingTree, 2019

As you can see, the better your credit score is, the more you can expect to borrow with a personal loan, and the lower your finance charges should be. So the keys to saving money are to get your credit in the best shape possible and compare offers in order to identify the best terms you can qualify for.

Your free WalletHub account provides customized credit improvement advice, along with personalized recommendations for offers likely to save you money.

No, you don’t have to pay APR if you pay on time and in full every month. And your card most likely has a grace period. A grace period is the length of time after the end of your billing cycle where you can pay off your balance and avoid interest. To take advantage of a grace period, you need to pay for all your charges every single billing cycle. If you don’t do that one month, you’ll lose your grace period, and your charges will start accruing interest right away. You’ll have to pay in full for two consecutive billing cycles to get it back.… read full answer

So paying on time won’t get you out of paying interest on its own. You’ll just avoid paying late fees and hurting your credit score. You have to pay in full if you don’t want to pay interest.

Here’s how to avoid paying APR:

• If you pay your bill in full by the due date every month, you won’t pay any interest, thanks to the grace period most credit cards have.
• A credit card’s grace period typically is the time between the end of the billing cycle and the due date.
• If you lose your grace period by carrying a balance past your due date, you can get it back by paying your bill in full two months in a row.
• Balance transfers and cash advances don’t have grace periods, so interest will begin piling up as soon as you make the transactions. The exception is if your balance transfer has a 0% introductory rate for a certain number of months.
• Getting a 0% Intro APR credit card gives you a larger window of opportunity to pay off your credit card. It allows you to pay off your balance before the end of the promotional APR period without accruing interest. You’ll still need to pay at least the minimum payment on time and any remaining balance that hasn’t been paid off by the end of the introductory 0% APR period will accrue interest at the card’s regular rate. It’s also a good idea to pay more than your minimum payment every month, as leaving a big balance on a credit card for a long time can cause a dip in your credit score.

The simplest way to handle things is to set up automatic monthly payments for your full statement balance from a bank account. Just make sure that account’s balance doesn’t get too low.

A good interest rate on a personal loan is 2.49% to 9%. The average APR for a two-year personal loan from a bank is 9.46%, according to the Federal Reserve, and the best personal loans have APRs as low as 2.49% for the most creditworthy borrowers. The rates you get will depend heavily on your credit, income, debt and other financial factors.… read full answer

The best way to get a decent interest rate on a personal loan is to comparison shop and get pre-qualified. WalletHub’s free personal loan pre-qualification tool helps you see which lenders have a high chance of approving you, as well as what interest rates you are likely to get if approved. You can then compare your pre-qualified offers to see what a good interest rate on a personal loan is for you personally.

Good Interest Rate on a Personal Loan by Credit Level

• For excellent credit: You may be able to get interest rates as low as 4% - 7%. That’s where the majority of lenders set their minimums.
• For good/fair credit: You’re unlikely to get the lowest interest rates available, nor should you have to pay lenders’ maximums. Look at lenders’ credit score requirements; the higher your score is above their minimum, the better your chances of getting a lower rate.
• For bad credit: You probably won’t find rates lower than 25% to 36% from a bank or online lender. But personal loans from federal credit unions are capped at 18%.

If you’re planning on consolidating debt, a good interest rate on a personal loan is one that’s significantly lower than the rates on your existing debt. But as you compare personal loan interest rates, don’t neglect other terms.

A low interest rate might not be as great as it seems if you also have to pay costly fees to go along with it. For example, many lenders charge “origination fees” of 1% to 6% of the loan amount as an extra cost for opening the loan.