Is 12% interest on a loan bad?
In most circ*mstances, a 12% interest rate on a personal loan definitely qualifies as a good rate unless the borrower has nearly perfect credit. To guarantee that you will be able to qualify for an interest rate near 12%, you will need to have a good to excellent credit score of over 700 points.
A good APR on a personal loan is typically one below 12 percent. But to qualify for it, you'll need a credit score above 670 and a stable source of income or a creditworthy co-signer that meets these requirements. Securing a low APR can save you thousands of dollars over the life of a loan, as shown in the table below.
National average: As of February 28, 2024, the average APR for a personal loan in India stands at approximately 12.10%. While this serves as a useful benchmark, your creditworthiness may qualify you for a more favourable rate. Credit score: Your credit score has the most significant impact on your APR.
Grace Enfield, Content Writer. Yes, 12% is a good personal loan rate because it is below the market average. Applicants with a credit score of 660 to 850 could qualify for a personal loan with a 12% APR if they choose the right lender and have enough income to afford the loan.
A high-interest loan is one with an annual percentage rate above 36% that can be tough to repay.
Avoid loans with APRs higher than 10% (if possible)
“That is, effectively, borrowing money at a lower rate than you're able to make on that money.”
An APR is the interest rate you are charged for borrowing money. In the case of credit cards, you don't get charged interest if you pay off your balance on time and in full each billing cycle. Card issuers express this rate annually, but to find your monthly interest rate, simply divide by 12.
Key takeaways. Your credit card APR can go up if the prime rate changes, you paid your credit card bill late, your intro APR offer ended or your credit score dropped. If your APR increases, you can work on paying down your balance or transfer your balance to a card with a low or 0 percent intro APR offer.
To make loans, banks have to first borrow the money themselves, either from other banks or from their customers' deposits. The interest rate on a personal loan reflects how much it costs a bank to borrow money, in addition to the inherent risk of lending money when there is no guarantee that it will be repaid.
The average personal loan interest rate was 12.35% in November 2023 on two-year loans, according to the most recent data from the Federal Reserve. But personal loan interest rates can range from 6% to 36%, depending on your credit score, income, current debts, and other factors, such as loan term and amount.
Can you negotiate a lower interest rate on a personal loan?
The interest rate of your personal loan depends on your financial report and credit score. You can negotiate your interest rate to adjust your EMI to make it more manageable.
Car Loan APRs by Credit Score
Excellent (750 - 850): 2.96 percent for new, 3.68 percent for used. Good (700 - 749): 4.03 percent for new, 5.53 percent for used. Fair (650 - 699): 6.75 percent for new, 10.33 percent for used. Poor (450 - 649): 12.84 percent for new, 20.43 percent for used.
| Credit score | Average loan interest rate |
|---|---|
| 720–850 | 10.73%-12.50% |
| 690–719 | 13.50%-15.50% |
| 630–689 | 17.80%-19.90% |
| 300–629 | 28.50%-32.00% |
Usury Laws and the Credit Card Industry
Today the highest credit card rate goes as high as 36 percent, much higher than the 24 percent cap set by states with tighter usury limits. While the 36 percent rate is considered usurious under many states' usury laws, that figure is nonetheless legal.
Student loans are some of the easiest loans to get with a 730 credit score, seeing as more than 70% of them are given to applicants with a credit score below 740. A new degree may also make it easier to repay the loan if it leads to more income.
If you are near-prime (basically meaning you have a good credit score, but it's not excellent) then expect to pay from 12% to 19%. Specialist lenders for those with lower credit scores kick in around the 20% APR mark rising to 50% and even higher if you have a poor credit history.
The good news is yes, usually you can. If you receive a cash windfall, using the money to clear debt ahead of schedule can save on interest. And your credit score may improve as you lower the amount of debt you're carrying relative to your income.
A 15% APR is good for credit cards and personal loans, as it's cheaper than average. On the other hand, a 15% APR is not good for mortgages, student loans, or auto loans, as it's far higher than what most borrowers should expect to pay. A 15% APR is good for a credit card. The average APR on a credit card is 22.9%.
APR – or Annual Percentage Rate – refers to the total cost of your borrowing for a year. Importantly, it includes the standard fees and interest you'll have to pay.
A 14% APR is not high for a credit card, as it is below the average APR for new credit card offers. Credit card APRs can still be much lower, though, and some cards offer an introductory 0% APR for a certain number of months.
Is 11% APR good or bad?
A good APR for a credit card is around 17% or below. A credit card APR in this range is on par with the interest rates charged by credit cards for people with excellent credit, which tend to have the lowest regular APRs.
Having a 700 credit score puts you in the “prime” category for borrowing. According to Experian, the average rates for this category are 6.44% for new-car loans and 9.06% for used-car loans.
| Credit score | Average APR, new car | Average APR, used car |
|---|---|---|
| Prime: 661-780. | 7.01%. | 9.73%. |
| Nonprime: 601-660. | 9.60%. | 14.12%. |
| Subprime: 501-600. | 12.28%. | 18.89%. |
| Deep subprime: 300-500. | 14.78%. | 21.55%. |
A 749 credit score is Very Good, but it can be even better. If you can elevate your score into the Exceptional range (800-850), you could become eligible for the very best lending terms, including the lowest interest rates and fees, and the most enticing credit-card rewards programs.
Consider debt consolidation.
If you have several sources of high-interest debt, debt consolidation may help you get a better handle on what you owe. This process allows you to combine several existing debts into a single, brand-new loan, ideally with a lower interest rate and more favorable repayment terms.
