When it comes to borrowing money, loans are the easiest way to get what you need. But, whether they’re a long or short-term borrowing plan, you’ll be responsible for paying back interest. Coastal Finance Company has been helping the Savannah, GA, community customize various personal loans for more than 15 years. Here, they explain how interest rates are affected by different types of loans.  

What Should You Know About Loans & Interest Rates?

What Determines a Loan’s Interest Rate?

There are a few factors that go into deciding an interest rate. Your credit history, the amount that’s borrowed and time range you plan to pay it back, and the overall supply and demand of the market are typical factors. If you’re taking out a large loan over a 20-year period, your interest rate is likely to be lower than that of a small one expected to be paid back over the year. If your credit score is poor or you have a history of not making payments on time, that can also affect the rate. Ultimately, rates can vary and will be laid out in your loan terms.

What Loans Have a Low-Interest Rate?

Car loans and mortgages are often taken with lower interest rates because they’re secure. If you miss too many payments, the lender can collect the asset itself—such as the car or home. These loans are often expected to be paid over a longer period, leaving the lender more opportunity to earn money.

What Loans Have a High-Interest Rate?

If you’re expected to pay back a loan quickly, interest rates can skyrocket. Borrowing money for emergencies—such as a car repair—will likely have a higher rate since the lender won’t make much of a profit. Fortunately, these can be approved fairly quickly, but it’s important to be able to pay them back quickly, too, so you’re not stuck paying much more than what you initially borrowed. Always read your terms, and speak with your lender to understand what you’ll be responsible for.

Whether you need to take out a loan for improving your home or purchasing a new car, the friendly and experienced team at Coastal Finance Company in Savannah are happy to help. With same-day service, you could be in and out with the cash you need in less than an hour and rest easy knowing the loan officers will customize a plan for you. To learn more, visit them online or call (912) 303-9979 today.