What are the interests with a loan?

The amount borrowed can have a significant impact on the interest you pay. Usually, the interest rate is lower if you borrow a large amount. One reason for this is that administrative costs form a smaller part. The same thing applies to the duration of the loan. If you take out a loan for a long time, the bank will not have the money for a long time. The interest will be higher.

Market interest

Market interest

The interest rate you pay depends largely on the market interest rate. This is determined by supply and demand. If the European Central Bank can lend cheap money to banks, it will also be cheaper for you. The opposite hypothesis also applies.

The risk

The risk

Have you ever had problems with loan repayments? It is highly likely that you will have to pay a higher interest rate. Banks do this because they run the risk of not seeing the money they have lent you.

Profit for the bank

Profit for the bank

Of course, the bank must also make a profit. For example, there is a difference between the interest she receives and the interest she pays. In addition, the bank also benefits from the transformation. Banks mainly attract short-term savings and convert savings into long-term loans. Short-term interest rates (the interest they have to give on savings accounts) are generally lower than they should be. That’s how they make a profit. Do you want to know how much profit the bank makes at your interest rate? You can find this in the credit proposal. It contains the “rate”, that is, the interest plus the profit for the bank. This is the original interest rate minus the linked index (average interest rate for this maturity of the month preceding the rate).

Do you know the interest rate and are you wondering how much interest you will pay? You can easily calculate this online via online interest simulations. All you need to know is the loan amount, the annual rate, the period and the method of repayment.

Copyright © 2020 cheepdishwasher | All Rights Reserved