When you focus on taking out a loan, you naturally need to compare interest rates. But what about interest? What are the interest rates based on? What does fixed or variable mean? Therefore more about interest this week.
To start with the basics: interest is the fee that you pay for borrowing money. This is also the reason that a loan costs money. Because of that interest, you pay your Good Credit provider back more than you have borrowed.
Interest rates of loans
The interest that you pay for your loan consists of a basic payment and a surcharge. The basic reimbursement is determined on the basis of the market interest rate. That market interest rate is what the bank itself pays to borrow money.
Increasing demand for loans means that the market interest rate is rising. Borrowing money then becomes more expensive. Does the question decrease? Then borrowing becomes cheaper and you borrow at a lower interest rate.
The surcharge component of the interest rate is determined by various factors:
- If you borrow a larger amount, you borrow at a lower interest rate.
- Do you opt for a loan with a short fixed-interest term?
- Then you are cheaper than with a longer fixed-rate period.
- When providing a loan, there is always a risk for the bank that the loan will not be repaid. High risk means a higher interest rate.
- Do you have a home of your own? Then you often benefit from a lower interest rate.
- Finally, the costs that a bank incurs also have an influence. You can think of personnel and office costs, for example.
Borrow money online: lower interest
This immediately makes it clear why borrowing money online has major advantages. At Good Credit, for example, we specialize in providing loans. As a result, we have fewer staff than large banks. Our office costs are also lower and the processes optimized. You can see that in our lower interest rate.
Continuous Good Credit with variable interest
Then the choice between fixed and variable. A fixed interest rate is part of the personal loan. You borrow a fixed amount at a fixed interest rate. The term of your loan is also fixed. This way you know exactly what you spend on your loan every month. So no surprises.
The variable interest rate of a continuous Good Credit may change. This is because the influence of fluctuating market rates plays a role here. Even if the costs that your lender incurs change, you may see this reflected in a higher or lower interest rate.
Compare interest rates
Are you going to take out a loan? Ask yourself whether the interest may be variable. Or do you prefer the certainty of a fixed interest rate? You can find more about the continuous Good Credit with variable interest and the personal loan with fixed interest on our website.
You can also compare the interest rates of different providers here. Or request a quote. Our Good Credit advisors are happy to think along with you about the best loan for you.
Ask yourself; how much money can I borrow? Then our calculation tool offers a solution.