A 5% APR is good for pretty much all types of borrowing, except for mortgages. On personal loans, credit cards, student loans, and auto loans, 5% is much cheaper than the average rate. You probably won’t be able to get a rate this low unless you have excellent credit, though – and it’s unlikely to even be offered in the case of credit cards.
5% Is a Good APR For:
Credit cards
A 5% APR is very good for a credit card. You’re unlikely to find an ongoing rate this low, though. The average credit card APR is 23.1%.
Personal loans
A 5% APR is very good for a personal loan. APRs on personal loans tend to range from around 4% to 36%.
Auto loans
A 5% APR is very good for auto loans. APRs on auto loans tend to range from around 4% to 10%, depending on whether you buy new or used.
5% Is NOT a Good APR For:
Mortgages
A 5% APR is not great for a mortgage. The average 30-year fixed mortgage rate is around 3%.
Student loans
A 5% APR is not great for federal student loans, which tend to have rates from around 3% to 5%. It’s decent for private student loans, whose rates range from 1% to 12%.
This answer was last updated on 03/26/24 and it was first published on 05/13/21. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.
FAQs
A 5% APR is good for pretty much all types of borrowing, except for mortgages. On personal loans, credit cards, student loans, and auto loans, 5% is much cheaper than the average rate.
Is 5% interest good or bad? ›
A high-yield savings account that pays 5% interest is highly competitive. Not only does it significantly outpace the average savings account interest rate, but it's on the high end of the scale even for high-yield savings products.
Is a 5% interest rate on a car good? ›
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.
What does 5 percent APR mean? ›
Annual percentage rate (APR) refers to the yearly interest generated by a sum that's charged to borrowers or paid to investors. APR is expressed as a percentage that represents the actual yearly cost of funds over the term of a loan or income earned on an investment.
What is a good APR for a 72 month car loan? ›
Compare 72-Month Auto Loan Rates
| Lender | Starting APR | Award |
|---|
| 1. MyAutoloan | 6.99% for 72-month auto loans | Best Low-Rate Option |
| 2. Autopay | 5.69%* | Most Well-Rounded |
| 3. Consumers Credit Union | 5.99% for 72-month loans | Most Flexible Terms |
| 4. PenFed Credit Union | 4.74% for 72-month loans | Most Cohesive Process |
1 more rowThe APR you receive is based on your credit score – the higher your score, the lower your APR. A good APR is around 22%, which is the current average for credit cards. People with bad credit may only have options for higher APR credit cards around 30%. Some people with good credit may find cards with APR as low as 16%.
Is 5% a high-interest debt? ›
Some experts say any loan above student loan or mortgage interest rates is high-interest debt, a range of about 2% to 6%. Financial planners often recommend paying off "high-interest debt" before saving or focusing on other financial priorities.
Is 5% good on a savings account? ›
The best 5% interest savings accounts can help you reach your financial goals faster. Whether you're saving for a down payment on a house, paying off student loans or building an emergency fund, the higher your interest rate, the sooner you'll get there.
Is 5% interest on a loan high? ›
According to Rachel Sanborn Lawrence, advisory services director and certified financial planner at Ellevest, you should feel OK about taking on purposeful debt that's below 10% APR, and even better if it's below 5% APR.
Why is my APR so high with good credit? ›
Even people with good credit scores make mistakes, and a bank may charge a penalty APR on your credit card without placing a negative mark on your credit report. Penalty APRs typically increase credit card interest rates significantly due to a late, returned or missed payment.
Comparing low, average, and high APRs
| APR | Rate | Observation |
|---|
| Low | As low as 3% | Available to borrowers with excellent credit |
| Average | Currently, between 6% to 11% | Reflects typical market rates |
| High | Start around 20%, rising to 50% | Typically for borrowers with poor credit or limited financial history |
The average auto loan interest rate in the first quarter of 2024 was 6.73% for new vehicles and 11.91% for used vehicles, according to Experian. However, the rate you receive on a car loan will depend on your credit scores. The higher your scores, the lower your auto loan rate.
What is 5% APR on $20,000? ›
If you borrow $20,000 over five years with a 5 percent interest rate, you'll pay $2,645.48 in interest on an amortized schedule. If you keep all other loan factors the same (rate, term and interest type) but increase your loan amount to $30,000, the interest you pay over five years would increase to $3,968.22.
Do I pay APR if I pay on time? ›
Your credit card's annual percentage rate (APR) is your credit card's interest rate. If you carry a balance on your credit card, you'll need to pay interest until it's paid off in full. If you pay off your monthly statement balance in full and on time, you likely won't need to pay interest on purchases.
What does 5% interest rate mean? ›
For example, if you borrow $100 with a 5% interest rate, you will pay $105 dollars back to the lender you borrowed from. The lender will make $5 in profit. There are several types of interest you may encounter throughout your life. Every loan has its own interest rate that will determine the true amount you owe.
Is 5 APR good for savings? ›
The best 5% interest savings accounts can help you reach your financial goals faster. Whether you're saving for a down payment on a house, paying off student loans or building an emergency fund, the higher your interest rate, the sooner you'll get there.
What percent APR is too high? ›
Anything below the average credit card interest rate — 24.71% for new offers, as of May 2024, according to a LendingTree study — is generally considered a good APR, and anything above that rate is considered high.
Is 5 percent interest on a mortgage good? ›
Mortgage rates change all the time. So a good mortgage rate could look drastically different from one day to the next. Right now, good mortgage rates for a 15-year fixed loan generally start in the mid-6% range, while good rates for a 30-year mortgage typically start in the high-6% range.
Is 5.9 percent APR good? ›
On a 36-month loan, 5.9% APR with above-average credit is a bad rate. If you see a rate this high with captive financing, it could be because it's for a longer-term loan. For example, Ford Credit's best 75-month rate on the popular Bronco Sport is 5.9% APR. On the Mustang, there's even an 84-month APR deal at 5.9%.
