Interest Rates Explained
At its simplest, interest is a fixed charge for borrowing money, normally calculated as percentage of the amount borrowed. Although this definition might seem straightforward, it contains several nuances which could have a real impact on the attractiveness of one loan versus another.
Monthly payment which you are required to make on your loan will be a function of your interest rate, the amount you are borrowing, the length of the loan and method used to calculate the interest. Understanding the jargon and complexity of the interest calculations on your loan will allow you to make a more informed financial decision about your future.
For example, most types of loans have a fixed rate of interest. This means that the monthly payments can be accurately calculated for the entire life of the loan. If the interest rate is variable, it could fluctuate over time and when it does your monthly payments will change as a result.
The following links provide information about understanding interest rates:
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