oops, guess that poll question range was too wide, not specific enough

[netmouse]

For those who answered (some form of) Yes, a certain loan interest rate seems excessively high, the majority responded that "too high " starts between 5 and 25 %, and I'd like to see a breakdown on that. Please answer this question too!

[Poll #1343223]

Comments

[dagibbs.livejournal.com]

To a great extent, "too high" can't be defined in isolation. It must be defined in contrast to the current rate of inflation. If inflation is running at 15%, then a banking lending money at 12% is losing money on the transaction. One really needs to talk in terms of "real" interest rates, rather than nominal.

Or, to make it clearer, if I could borrow money in Zimbabwe at 100% per annum, that would be a steal, because by a year later I could pay that loan back from pocket change.

[sethb.livejournal.com]

What type of loan? Short or long term? Secured or unsecured? How risky?

[sorcycat.livejournal.com]

I was hoping for a poll on variable rate loans, because those are what I think are evil. :)

[rmeidaking.livejournal.com]

I agree with dagibbs. You need to consider the larger economy in order to determine what a good interest rate is. Another key factor is the term of the loan; one might expect a higher rate on a short term loan, for instance, which is a reason banks give for having high credit card rates and low mortgage rates.

In general, I think anything over 10% is excessive, but I admit that I have an aversion to paying interest. I would go for 6% on a mortgage, and as high as 9% on a credit card.

[sarahmichigan.livejournal.com]

I'm also of the "it depends" camp, but for slightly different reasons. I think that it's legitimate to have higher rates for optional expenditures over things that are closer to necessities. Car loans and home loans should be under %10, preferably under %7 while I think it's OK to have 15% rates on credit cards. I realize some people use credit cards for the necessities of life, but I also think it's a really bad idea to carry a balance on your card for the necessities of life unless it's an ultra-emergency.

[ex-yakaveng.livejournal.com]

I think the only reason I answered so high is because of the credit card interest rates (those bastards).

[cos]

I think it depends a lot on both the kind of loan (size, term, purpose), and the current state of monetary policy (which affects things like how high a return I get on my IRA and my bank accounts).