Which type of loan typically has the highest interest rate?
Andrew Campbell
Updated on February 10, 2026
Personal loans and credit cards come with high interest rates but do not require collateral. Home-equity loans have low interest rates, but the borrower’s home serves as collateral. Cash advances typically have very high interest rates plus transaction fees.
What is a high percentage rate on a loan?
In general, the higher your credit score, the lower the rate will be. Individuals with excellent credit, which is defined as any FICO credit score between 720 and 850, should expect to find personal loan interest rates at about 9% to 13%, and many of these individuals may even qualify for lower rates.
What is annual percentage rate on a loan?
The Annual Percentage Rate (APR) is the cost you pay each year to borrow money, including fees, expressed as a percentage. The higher the APR, the more you’ll pay over the life of the loan. An auto loan’s interest rate and APR are two of the most important measures of the price you pay for borrowing money.
What is the cheapest type of loan?
Cheapest ways to borrow money
- Personal loan from a bank or credit union. Traditional financial institutions like banks or credit unions tend to offer the lowest annual percentage rates, or total cost of borrowing, for personal loans.
- 0% APR credit card.
- 401(k) loan.
- Personal line of credit.
What is a good interest rate on a loan?
Generally, a good interest rate for a personal loan is one that’s lower than the national average, which is 9.41%, according to the most recently available Experian data. Your credit score, debt-to-income ratio and other factors all dictate what interest rate offers you can expect to receive.
Is 12 percent a high interest rate?
A good interest rate on a personal loan is one that’s lower than the national average—less than 12% in March 2021. That said, the actual interest rate you’ll qualify for depends on several factors, and lenders frequently charge other fees that can make a loan more expensive.
What is the Annual Percentage Rate on a loan?
He covers banking and loans and has nearly two decades of experience writing about personal finance. The annual percentage rate (APR) of a loan is the interest you pay each year represented as a percentage of the loan balance. 1 For example, if your loan has an APR of 10%, you would pay $100 annually per $1,000 borrowed.
What’s the lowest interest rate you can get for a personal loan?
Borrowers with good to excellent credit scores (690 and higher on the FICO scale) will likely receive the lowest rates. Your credit score isn’t the only factor lenders review on an application, but it’s often an important one. How’s your credit? 28.7% (Lowest scores unlikely to qualify.)
What are the interest rates for installment loans?
The interest rate for installment loans varies by lender and is tied closely to the consumer’s credit score. The best interest rates go to borrowers with credit scores of 740 and higher. Interest rates go up as credit scores go down. The lending institution can seize the consumer’s property as compensation if the consumer defaults on the loan.
Which is the most common type of mortgage?
The most common mortgage loans are 15- and 30-year fixed-rate mortgages, which provide an unvarying monthly rate over the duration of the loan, and 5/1 hybrid adjustable-rate mortgages, which have a fixed rate for the first five years, after which they adjust annually.
