Loans Rates: THE PAY BACK

2007-03-08 10:33:40

( Financial )



THE PRIZE YOU PAY

Loans rates refer to the surcharge or interest percentage a bank or financial institution charges you in return for providing you a financial service or product like lending you money or giving out a mortgage on your property.

These loans rates are paid on top of the principal loan amount that you have borrowed from them. Loans rates are the main ways by which banks and other lending companies generate income and grow their business.

Loans rates depend on the type of loan or financial service that you will be getting. For instance, refinance mortgage rates are computed differently from equity loan rates. Loans rates are computed based on several factors, but the more important considerations are the principal amount that you are borrowing as well as the length of payment terms that you plan to avail of.

VARIABLE RATES

Because loans rates are based primarily on the principal loan amount, the rates vary accordingly. Usually, a bigger loan amount has a lower interest rate because the base amount from which the loans rates are based is higher, and a smaller debt calls for higher loans rates. Conversely, a longer term loan will have lower loans rates because you end up paying more as the loan payment is spread over a longer period of time.

Usually, loans rates or loan interest rates are good indicators of a given society’s economic situation. In times of an economic recession, loans rates are generally high because lending money during bad financial times are considered very risky for borrowers such as banks. Loans rates are high in these circumstances because only good businesses and companies, or those who have not much to lose will dare to borrow during these times.

If signs of economic recovery are apparent, the financial industry will in turn adjust to the trend and offer lower loans rates to encourage more borrowings from businesses and private individuals.


All rights Reserved © Tradenet Services srl
Do not duplicate or redistribute in any form.