Understanding Loan Rates

[Grace Perry]

Maybe you've heard about the horrific crash in America's housing
marketing recently? It's hard not to know about it; the disastrous
outcome is all over the news. We know it happened, but how? Well,
people were simply getting into situations they couldn't afford. They
were signing home loans with variable interest rates. These loan rates
spiked tremendously and people could no longer afford to pay for their
mortgage. Ouch!
Simply put, loan rates are the interest rates applied to your loan,
personal or otherwise. They are added to the principal cost of the
loan, so long as you're making payments on it. Loan rates are easy
enough to understand, but not always easy to pay.
No matter what you're planning to take out a loan for, be it an
automobile, home, college, etc, rates are added on top of the fee so
the lender is always making money. But all loan rates aren't the same;
they differ depending on the "type" of loan you take out.
It may seem backwards, but the less amount of money you are loaned,
the higher the loan rates are going to be. This is because you're not
repaying the loan over a prolonged period, thus there's no real money
to be made for the lender. The lender is also taking a risk. The lower
the loan amount, the less likely it is to be repaid. I know; it's
another seemingly backwards happenstance.
There's really nothing you can do to completely avoid loan rates.
There are some loans that give you a steady rate, some that fluctuate,
but they all have a rate of interest that needs to be paid. And the
higher your loan amount is for, the less interest needs to be repaid
to the lender.
You can always shop around for the best loan rates in the lending
industry. It's a good idea to do your homework on different financial
institutions, but also different loans. If you're receiving an
unsecured loan for, say, 20-thousand, check that against a secured
loan (if possible to receive) for the same amount. The loan rates on
the latter may be much lower over time.
Like everything else in the world of money lending, you need to take
careful measures to ensure that you're not getting in over your head.
Make sure to check on the loan rates to avoid being swindled. Other
than that, you just have to eat the fact that all loans have rates.