Loan Interest Rates
Because not all loans carry equal interest, freecreditreport.com wants you to understand
exactly what you're paying for credit, particularly since uninformed
decisions can lead to financial jeopardy.
A loan interest rate of 1.5 percent per month may seem reasonable enough, but a consumer needs to know the APR before he or she can compare lenders. Some lenders promote introductory offers of loans at what are called "teaser" rates. These loan interest rates are relatively low, but are soon replaced with much higher rates.
When comparison shopping for a vehicle, house or a credit card, you
should seek out the lowest APR possible and lock it in place if possible. In
the case of credit cards, though, you need to add other factors into the equation
such as length of grace period, fees, late payment penalties
and potential increases in the loan interest rate with relatively little warning.
If a low interest rate is tied to an economic index, as is the case with
an adjusted-rate mortgage, then the rate can rise or dip. With a home
loan, the ideal situation is for the lender to guarantee a low interest rate, so that
you can avoid being locked into a relatively high rate at a time when rates
are going down.
You may clarify loan interest rate terms with potential lenders so that comparisons
are viable. Does the fixed rate hold true for the entire length of the
loan? Or is the lender really talking about a fixed rate for just part of the
loan period? Is there a relatively low interest rate period followed by a balloon
Before purchasing a home, you'll want to understand how many points are involved in the transaction. One point represents one percent of the loan's face value. With any loan, you'll want to study tax laws to see if you can't deduct the interest.
Some loans such as certain home equity loans require interest-only payments.
Although they're fine during times when a consumer might be trying to stave
off personal bankruptcy
or foreclosure, these payments never reduce the principal. Find out more information about Loan Comparisons.