Most banks and other lenders apply individual interest rates. This means that there is not a fixed interest rate that everyone gets, but instead the lender has a range within which you end up. What determines exactly what interest rate you receive is both your own finances and the details of the loan you want.
Since the interest rate is individual and set after you apply for a loan, it is difficult to know exactly what you will get for interest on your loan. Therefore, it is also a little difficult to know what the loan will cost in the end and it can also be a bit tricky to compare different lenders with each other. The question then is what determines the interest rate, what you can possibly get and how to think before your loan.
Your interest rate on mortgages
The mortgage is a loan with individual interest rates and historically it has always been a fairly important question what you can get for a mortgage interest rate. The mortgage is a big loan and everything you can do on the interest rate gives a pretty big impact on the total cost of the loan.
Exactly what mortgages have always meant is negotiation and bargaining. In principle, it was included as a standard earlier that one would bargain on the interest rate. The list interest rate may, for example, be at 2%, but the interest rate that people on average could get low may instead be around 1.5%. Today it is still a bit the same but since all banks have to present an average interest rate that shows what people have actually received, it is clearly easier to handle the negotiations with the bank.
Now you do not miss the interest rate you should actually get in the same way. So those who have not thought about bargaining on the interest rate or who were bad at negotiating have a little easier nowadays. In summary, we can say that you should always negotiate the interest rate on your mortgage. You can always get a little lower than what the list rate says. Look at the average interest rates (which the banks must present) to see what people usually get and demand about the same.
It will always record a little how good your finances are and how much of the loan you want as a mortgage, how much you pay in cash, etc. But also remember that you have the power to choose and wreck among many different banks and you have a big advantage there.
Your interest rate on private loans
A home loan can be a bit tricky when it comes to interest rates, as there is almost always a range here, in which you can end up either high or low depending on various factors. For example, today the interest rate can be from 4.5% up to 12.5% or similar with a certain lender. It is difficult to know exactly where you end up in this team, but it is probably good to hope to get as low as around 4.5%.
The first thing that affects the interest rate is how much loan you want, how long the repayment period and how much. A larger loan with a slightly longer repayment period can have a lower interest rate than a small loan, etc. The other thing that affects you is yourself.
Your financial situation obviously affects. If you have a good economy with a high income and good margins, the bank feels more secure with the loan and you can get a lower interest rate. Your assumptions do part of the interest rate, so if you have small margins and are a little more insecure as a borrower, you can get a higher interest rate on the loan.
Some private loans may have a fixed interest rate. This is usually about lenders who lend a little less amount, for example a maximum of USD 50,000 and a maximum of five years. These lenders usually have an extra high interest rate. If the ordinary bank has its range between 5 – 13%, such a lender may have a fixed interest rate of 29% instead.
Your interest rate on SMS loans
For this type of loan, there is usually a fixed interest rate, so that you know exactly how much to repay in advance. The interest rate for SMS loans is high in relation to other loans, which is partly because such loans are generally expensive (for example, they are expensive because they have to include a higher risk that people cannot pay) and partly because these loans have so short term. The maturity is often only 30 – 90 days and when this is calculated, the interest rate becomes extra high.
Interest is always calculated per year and if you convert an interest rate for a loan of 30 days to a full year, it automatically becomes high. One should not be intimidated by the fact that the interest rate feels strangely high, but one should always remember that this type of loan is on the whole also more expensive than ordinary larger private loans.