Loans, for many Americans, are a fact of life. This is because certain items we need, such as places to live, cost more than we can afford without help.

Before getting any kind of loan, it’s always smart to learn as much as you can about the type of loan, how much you can afford to borrow, and what a good interest rate is for the loan.

In this article, we’ll look at four different kinds of loan types and focus on what a good interest rate is for each type of loan.

Tip: To make sure you’re getting the best rate, you want to maintain a good credit score. Check out Experian Boost for an easy and free way to work on improving your score. Read more about it in our review.

Note: Interest rates mentioned in this article are up-to-date as of November 10, 2020.

Car Loans

Chances are you’re like most people, and when you buy a car, you can’t pay for the entire vehicle outright. So, like many Americans, you need a car loan. A car loan is a form of personal loan. However, the loan is to be used specifically to purchase a car and not for any other reason.

A lender loans the borrower money to buy the car, and the borrower pays the loan back, typically in monthly installments. Installments are paid until the entire car loan is paid off. Usually, a car loan lasts anywhere from three to six years. Unfortunately, we tend to love new cars. However, after six years, we may not love it as much as before.

Another difference between a car loan and a personal loan is that a personal loan is typically unsecured while a car loan is secured.

What is the collateral for a car loan? It’s the car itself. In other words, if the borrower fails to pay back the loan, the vehicle may be repossessed.

A car loan is made up of principal and interest. The principal is the cost of the vehicle, minus any down payment. The interest is the amount paid to the lender that includes repayment of the principal as well as an amount above the repayment at a particular rate.

Interest makes it worthwhile for a lender to loan money and is a way for the lender to make money off of the loan. Interest rates are typically at a specific annual percentage, known as the annual percentage rate (or APR).

When paying for a car, the borrower will typically make a down payment on the total price and then pay for the rest of the vehicle with the loan. When purchasing a car, usually the buyer can apply for the loan right there at the car dealership. It should also be noted that a car dealership normally will not let you purchase a car from them without proof of car insurance.

What Is a Good Interest Rate for a Car Loan?

The interest rate for your car loan will typically depend on your credit score. For example, here are the average interest rates in 2018 on car loans by credit score, according to Experian:

  • 781 to 850: 4.19{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6} (New); 4.69{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6} (Used)
  • 661 to 780: 5.01{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6} (New); 6.38{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6} (Used)
  • 601 to 660: 7.91{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6} (New); 10.91{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6} (Used)
  • 501 to 600: 12.17{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6} (New); 16.78 (Used)

For more information, check out our guide on how to find the best auto loan rates.
Check out the table below for competitive rates on auto purchases:


Mortgage Loans

Just like with a car, and perhaps even more so, most Americans are not in a financial position to purchase a home outright. You can sell a house and use the proceeds to buy a new home, but otherwise, chances are you’ll need a mortgage.

A mortgage is a legal document used to buy a house or refinance a home. A lender issues a mortgage and if you fail to pay the mortgage, your house can be taken from you or foreclosed. Paying back a mortgage is typically done on a monthly basis until the loan is paid off. It includes the principal minus your down payment, plus interest.

Mortgages will be either conventional or government-backed, such as a VA loan. Government-backed loans typically have lower interest rates. Conventional loans conform to the financing agencies of Fannie Mae and Freddie Mac, which were created by the United States Congress to protect and stabilize the mortgage market.

A down payment of as low as three percent is allowed, although down payments of less than 20 percent typically require mortgage insurance. Usually, the borrower will need a credit score of at least 620.

Loans can be fixed-rate or adjustable-rate. With a fixed-rate loan, the interest rate and the loan payment will remain the same throughout the term of the loan. With an adjustable loan, the interest rate can change according to the terms of the contract, which will make your mortgage payment either decrease or increase.

What Is a Good Interest Rate for a Mortgage?

The national average mortgage rate will depend on the state of the economy. Currently, for a 30-year fixed-rate loan, the average interest rate is 3.04{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6} and the average APR is 3.34{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6}. For a 20-year fixed-rate loan, the average interest rate is 3.02{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6}, and the APR is 3.30{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6}. For a 15-year fixed-rate loan, the average interest rate is 2.51{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6}, and the APR is 2.80{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6}.

For more reading, check out our guide on how to find the best mortgage rates.

Compare Current Mortgage Rates

Personal Loans

A personal loan is given to you by a lender and allows you to use it for any purpose. They are typically designed for quick funding as some might need it in an emergency. They also tend to have short-term repayment options.

Examples of uses for personal loans include paying off a medical bill, funding a trip, paying for home improvements, consolidating debt, paying for a wedding, buying furniture, covering small business expenses, and more.

However, as I’ll list below, the interest rate for a personal loan can be on the high side, depending on your credit and where you look. Therefore, these kinds of loans may or may not be the best choice. They should not be taken lightly due to their high-interest rate.

The interest rates will be either fixed or variable. Personal loans are typically paid off within a few months to a few years. A personal loan is typically an unsecured loan – meaning you don’t need collateral to get approved.

Some personal loans include lender’s fees. These might be late fees and fees if you prepay early on the loan. Funds for personal loans can often arrive within 24 hours to a few days.

Your credit score plays a big part in obtaining one of these loans. The better your credit score, the better your chances of getting a low-interest rate. There are also personal loans for people with bad credit, but the interest rates for these loans are almost always high. And if you do not have a job and a checking account, obtaining a personal loan is extremely difficult.

What Is a Good Interest Rate for a Personal Loan?

A good interest rate for a personal loan will take into account your credit score, your credit history, what your annual income is, and if you have existing debt. Current interest rates for a personal loan range from 6{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6} to 36{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6}.

Again, because these loans vary so widely, I’m going to give you some rough estimates on what “good” is:

  • If you have an excellent credit score of 720 to 850, a good APR can be around 13.9{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6}.
  • If you have a fair credit score of 630 to 689, your APR might be around 21.8{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6}.
  • If you have a bad credit score of 300 to 629, the APR could be around 27.2{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6}.

Tip: Fiona will scour the internet for the lowest rates for your own personal needs, and they’ll send you to one of their lending partners

For another point of reference, check out our best personal loan lenders and rates, but here’s a quick summary of what each of our favorites charges in interest:

  • Monevo – 1.99{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6} to 35.99{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6} APR
  • LendingClub – 10.68{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6}-35.89{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6} APR
  • LendingTree – 11.24{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6} to 24.21{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6} APR (effective averages; rate quotes from 2.49{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6})
  • Credible – 4.99{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6} – 35.99{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6} APR
  • Prosper – 7.95{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6} to 35.99{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6} APR
  • SoFi – 5.99{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6} to 18.238{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6} APR (with AutoPay)
  • Upstart – 7.98{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6} to 35.99{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6} APR
  • Best Egg – 5.99{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6} to 29.99{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6} APR

Student Loans

Unless a student has the money to pay for college on their own, student loans are typically used. Currently, approximately 44 million Americans have student loan debt. A student loan can be used for tuition, but it can also be used for books, dorm expenses, etc.

As I’ll list below, student loans typically have low-interest rates. Furthermore, a student typically does not have to repay a student loan until they have completed their education. Student loans come in a variety such as private, federally funded, specifically designed for low-income students, etc. However, most student loan debt is federal.

With Ascent you may qualify for a private student loan with our without a cosigner. You can even check your rate without having to impact your credit score. Standout features here include getting 1{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6} cash back and a discount for setting up automatic payments, no penalty for paying off your loan early and customized repayment terms.

If you want to shop around to find the best rate for a student loan, we suggest Credible. Simply fill out Credible’s online application and you’ll receive offers from lenders in minutes. The great feature here is the rates you’ll receive from the lenders will be actual rates and not just ranges. Using Credible also won’t negatively impact your credit score as Credible will do a soft credit pull.

What Is a Good Interest Rate for a Student Loan?

The current average student loan interest rate is approximately 5.8{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6}. The interest rate will depend on whether the interest rate is federal or private. For federal loans, the interest rate will be the same for every borrower. For private loans, it will depend on credit scores.

For a federal loan, the terms are always fixed. The current interest rate for undergraduate school is 4.53{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6}, and for graduate school, it’s 6.08{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6}. For private student loans, the current interest rate for a fixed loan is 3.64{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6} to 13.63{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6}. For a variable loan, the current interest rate is 2.72{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6} to 11.88{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6}.

Remember that these rates will vary depending on who your private lender is. I would recommend looking at our guide on how to pick the best student loan repayment plan for some more information here.

Bottom Line

As you can see, loan rates vary by the type of loan you’re going after, so it’s best to narrow down your goals first, then look for the best option. Also, note that rates are constantly changing with the economy and other factors, so it’s best to use this as a general guideline but work with some of the specific vendors we’ve listed above to get a more accurate view on current rates.