Lenders that have high interest rate personal loans include NetCredit (34% to 155% APR), Integra Credit (99% to 299% APR), and LoanMe (9.90% to 184.36% APR). Lenders like these market themselves to people with bad credit, offering easy approval at the cost of much higher-than-normal interest. Most banks and online lenders won’t charge more than 25% - 36%, and federal credit unions cap their rates at 18%.
There are some loans that are even more predatory when it comes to high interest rates. So-called “payday loans” let you borrow against money from your next paycheck and require you to repay the amount with interest once you get paid. APRs on these types of loans can often be higher than 400%. Avoid them at all costs.
It is absolutely not worthwhile to take out a really high interest rate personal loan. Instead, you should consider lenders like LendingPoint, which has a minimum credit score requirement of just 585 but a maximum APR of 35.99%. Or, you can visit your local credit unions, as they are often more willing to work with people who have bad credit than banks or online lenders are. Putting up collateral for a secured loan can also get you a competitive rate.
A good interest rate on a personal loan is 3.99% to 11%. The average APR for a two-year personal loan from a bank is 10.63%, according to the Federal Reserve. And the best personal loans have APRs as low as 3.99% for the most creditworthy borrowers.
The best way to get a good interest rate on a personal loan is to comparison shop and get pre-qualified. WalletHub’s free … read full answerpersonal 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.
The rates you get will depend heavily on your credit, income, debt and other financial factors.
Good interest rate on a personal loan:
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.
The best way to lower the interest rate on a personal loan is by refinancing the loan with another lender. When you refinance, you use a new loan or line of credit with a lower interest rate to pay off the old loan, so you owe the old balance to the new lender. And since interest won’t be accumulating as quickly, you should be able to pay off the new loan sooner, assuming your monthly payment stays the same or increases.… read full answer
But some borrowers may also find success simply asking for a lower rate. Asking for a rate reduction is the easiest route, as it doesn’t require applying for a new financial product. It’s just less reliable. Still, it’s a good idea to pursue both paths at once – pre-qualify for some refinancing options and then mention their rates when negotiating. If the original lender won’t offer a cheaper rate, then refinance.
How to Get a Lower Interest Rate on a Personal Loan:
Ask for a lower rate. If you call your lender and express concern that your APR is too high, there’s a chance the lender will reduce the rate. That’s especially true if you make it clear that you are experiencing temporary financial distress, that your creditworthiness has improved significantly since you applied, or that you are willing to take your business elsewhere. In any case, it doesn’t hurt to ask.
Take out another personal loan. If you get a lower interest rate on a new personal loan, you can use it to pay off the old one and save money in the long run.
Move the debt to a balance transfer credit card.Balance transfer cards offer 0% introductory APRs for a certain number of months, and are best if you’ll be able to pay off the remaining balance completely in that time period. You’ll need good or excellent credit to qualify.
Tips for Negotiating a Lower Interest Rate on a Personal Loan
You can pre-qualify for a personal loan or for a balance transfer credit card (but not for home equity products). So if you pre-qualify for a loan with lower rates or a 0% balance transfer card, you can use that to your advantage when negotiating with your lender. If they know you’re thinking of moving your balance elsewhere, they may work with you. If not, you’ve got a good deal to fall back on.
It also helps to have another good reason for why the lender should lower your rate. One example is if your credit score has gone up a lot since you first opened the loan, meaning you’re a less risky borrower now. Another is if you’re having financial hardship (e.g. unemployment, sickness or damage to your home from a natural disaster) and simply can’t afford your payments. Lenders may be sympathetic to these problems and offer you at least a temporarily lower interest rate.
The keys to negotiating with your lender are to be clear about what you want to accomplish, truthful about your situation, and polite to the representative. Ask for copy of any new terms you agree to in writing. And if you’re unable to get a good deal, refinance instead.
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