What is the interest rate?

Thus affects this index to our loans or mortgages.

Knows as interest rate the price that owe pay for use a cash amount during a period of time determined. Is the percentage of interest that pays as payment for use the above-mentioned amount of money, for example, for finance the purchase of a good or service through a loan or credit or through other methods of financing.

And is that the money, as any other product that wish acquire, has a market value . This it interest rate the above-mentioned mark. Put an example: if I you ask for the bank a loan of 50,000€, and your fixed cost is of 2% (1,000€), promissory note to the bank a total of 51,000€ for have he.

Factors that influence in the interest rate

  • The type of operation that carries out: not is the same thing request a secured loan mortgage that a personal secured loan, so the interest rate be different in every type of financing.
  • The term of the operation: when the money provides during more time, as in the case of the mortgages (whose term be usually longer in the time), the interest rate to apply to the financing operation can be lower. 
  • The case history of the customer: the have had other loans and have them paid punctually is condition important.

Which are the interest rates existing?

The price to pay for the money that requested, if take as reference possible changes that can suffer, can be:

  • Fixed: remains constant during all the life of the contracted product, what us allows know in advance the total of interests that pay.
  • Variable: changes during the period of repayment on the basis of an index or reference acquaintance for the parties in question (the EURIBOR, for example) and revises every a certain time (established previously in the contract) In this case, not can know which be the total of payable interests.
  • Mixed: mix of the 2 previous, applies the interest rate fixed during a part of the term of the financial operation, changed to a variable interest during the time that takes away until the completion of the term.

How affect the interest rates?

If are high

The lawsuit cancellation because of the markup of the interest rate. For example, not is the same thing request a loan of 10,000€ with an interest of 2% that do it with 5%. 

If are low

Unlike the prior case, the lawsuit increases to the be more “economic” the interest rate if you provide money. 

Additionally favors to the companies, since the payment of fewer interests them allows adjust better the budgets.