There is a difference between loans and loans. When you borrow money, you can pay interest from a few percent per year up to hundreds of percent.
What decides is partly whether there is any collateral for the loan, which is the case for eg. mortgage loans, but also how creditworthy you are as a person and your negotiating ability at the bank.
Some players sign with low or even zero percent interest
In fine terms, however, it may be that a fee is added each time you pay off your loan. If it is a long repayment period, the fee will be high in percentage terms, even if it is only a couple of tens, so avoid paying on the loan for a long time when a charge is added.
The interest amount is stated as the annual interest rate, so if the interest rate is 10 percent, it means that during one year, you will pay 10 percent of the loan amount in interest in addition to the amount to be repaid. If you have taken out a loan of USD 1000 and the interest rate is 10%, then after one year you should repay USD 1100 since 10 percent of USD 1000 is USD 100.
Since you often pay a certain amount of the loan each month, it is not as simple as calculating the real interest rate, but the principle is simple. The higher the interest rate, the more expensive it becomes when you do not pay the outstanding amount on time.
Mortgages are usually associated with low interest rates. This is because you have the property as security. But even the mortgage rates vary and since you often have it for a long time, it is important that you manage to pay a higher interest rate than the one set when you take out the loan.
Unsecured loans normally have a higher interest rate, but if you are creditworthy, have a permanent job with good income, you can also get these loans at a reasonable interest rate. You can read more about these loans on this website.
Credit is also a form of loan. You can buy an item and pay for it only later. Having a credit card is smooth, but many people choose not to have a credit card at all so as not to risk getting into a debt trap, but if you make sure you have money available when the outstanding credit is to be paid, it is a convenient way to manage your payments .
- borrow money