When you are considering what is a good interest rate for personal loan, there are several important factors that you should consider. If your credit is excellent, then you will obviously not want to pay more than the average interest rate, and if your credit is not so great, then you definitely want to avoid paying more than you need to. For example, if you are an excellent credit risk, then you probably have no trouble finding a great interest rate. However, if you have horrible credit, or if your credit is bad, then you need to know what you can expect to pay for personal loans.
Typically, a good interest rate on a personal loan is one which is significantly lower than your national average, which is usually 9.41%. Your credit score, your debt-to-income ratio and other variables all determine what interest you will be able to get. In addition to this, your credit card debt and your outstanding debts also play a role in determining what you are able to borrow. Fortunately, if you consolidate your credit cards, you will usually be able to lower your interest rates.
If you have poor credit, or if your credit score is average or below average, then you may need to shop around a little bit more before finding a lender who is willing to offer you a good interest rate. It is possible that the average interest rate offered to someone who has poor credit is far greater than the rate offered to someone with excellent credit, simply because the lender views you as a higher risk. Fortunately, if you do manage to get a lender to give you a reasonable interest rate, it will typically be a lot lower than what you would pay if you were to carry your individual credit cards with you every time you went out and bought something. The reason for this is that lenders are more willing to lend money to those with excellent credit ratings, because they see that they will be able to make the monthly payments on time. This type of security is very important to them, because it reduces the risk to them; hence, they are more likely to give personal loans with lower interest rates to people with excellent credit ratings.
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Nancy Davis - professional writer
Hello all ! I am Nancy Davis and i am writer of finance articles. Graduated finance program University of Houston. Nowadays, i have decided keep a blog about finance: trading, loans, credit cards, currency rates, last economic changes in the world and all that. I would be glad if my articles could help you learn more about finance.