Let's take a more in-depth look at loan rates.
- When buying a house or a flat, you would need a loan (mortgage) around $300,000.
- When purchasing a car, you would need a personal loan around $10,000.
- When paying off a bad credit debt, and paying it off fast you would most probably need a cash advance or a payday loan around $200.
- But no matter what type of loan you take out, loan rates will apply over the loan amount you receive.
Loan rates largely depend on a particular type of loan you have taken out and the financial conditions at that time. The rule of thumb here is that the loan rate will be much higher for a small amount short term loan and considerable lower for a bigger loan that you will have to pay out over an extended period of time.
Can a person avoid loan rates? No.
If you have taken out a loan in any form, loan rates are the cost of such a service and can't be divided from the actual loan. No one will give you money just because you need it. Loan rates represent a source of income for banks and other financial institutions by which they generate money and are able to offer loans in the first place.
Larger loans like mortgages can be offered at rather low loan rates of 4-5% per annum. In case of a smaller personal loan of around $5000 the loan rates will typically be around 15-20%, because of the much shorter period of repaying the loan amount.
Loan rates can change according to the economical situation at the moment.With some loans (typically the large ones) you can lock the loan rates and easily calculate the amounts you will have to pay out with these rates. Other types of loan rates, payday loans for example, can fluctuate significantly, largely depending on the current economical and financial situation. But no matter what, you should remember one simple thing: when there's a loan, there are loan rates coming with it.