I am 21 years old with NO(0) credit (which is apparently the same as having bad credit). I work part-time making $10 an hour. And I'm looking for a used car in the range of $5,000-$10,000. I cant find anyone to co-sign with me on a loan from my bank so my only option is to get a loan from the dealership. What kind of interest rate should I expect from a dealership?|||b|||I was in the dealership today with my boyfriend who is also 21 with no credit. We were looking at putting $15,000 down and buying a $21,000 car. He works 60+ hours a week making $18.00 a year.
The interest rate they tried to give us was 15% which meant it would take us 60 months (5 years) to pay off the rest of the car. Not cool. My parents said a good interest rate is 4-6 %|||If you have little or know credit, expect to pay 8%-12% on an autoloan from a dealership. Your best bet is to save your money and cash out a used car. Or get a co-signer and go to your local credit union for a loan.|||One thing to consider is that dealers are going thru banks just as you are, the benefit is that they have buying power to get a lower rate. In my experience, 25% down or more would be required to be considered for financing without a cosigner. Average interest rate is actually between 13% to 18%. Your interest rate does not determine your term. Average terms, depending on the year and miles of the vehicle) are 60 months. If it is a new vehicle than you can qualify for 72 months which would make your payments lower. Also, banks have no desire to finance anything less than $8,000. My advice to you if you truly cannot find a co signer, is save your money for a down payment, about 4 to 5 thousand, and look for a car less than five years old with less than 60k miles running for about 13 to 16 thousand. Good luck!|||0%.
You wont be approved.
Now, if you had a full time job with a year on the job and $2000-3000 down, you might stand a chance.
A buy here pay here dealer is a total ripoff and not because of the rate, 15-29% is not the problem. They double or triple price their cars because their customers have to take what they can get.
Saturday, December 17, 2011
What鈥檚 the best way to request a lower interest rate on a car loan?
We have a car loan that began in 2005 and have never made 1 late payment 鈥?every month the car loan was paid on time.
We鈥檝e recently received offers from various banks/loans proposing a lower interest rate.
We want to stay with our current auto loan provider but want them to lower the interest rate鈥?is that possible? If so, how should we approach this request?|||you can always get a lower intrest rate according to my bank
i can get them to refinance it at a lower rate sooo..
try your bank after buying the car through the dealerships lender. if your bank wont refinance try your insurance company they may refinance it. I know State Farm Insurance refinances vehicles.
it also is based on downpayment,payment history, and your credit score.
then they may possibly fight to keep you as a customer by lowering your current intrest rate.
do your home work first.
Good Luck i hope this helps!!!|||Car Loan Guide: http://carloanguide.automobiledeals.info
|||You signed a contract with a fixed interest rate for a certain period. The lender will reject your request for a lower rate leaving you no option but to continue to pay it. Alternatively, you might be able to get a line of credit with a bank at a lower rate, pay the car loan off and then pay off the bank loan with your former car loan payments. Be aware that many car loans have the interest front loaded. If you pay it off early you may be shocked that you would not have paid much interest going forward than if you simply kept the loan.
In other words getting a lower rate could prove to be more expensive.|||You walk in, tell them you have received offers of a lower interest rate, but you really want to stay with them, so what can they offer?
Their answer will dictate your next move.|||www.creditunion.coop
find your local credit union, and apply there, they have good rates.|||Flyboy is wrong.
Call your lender, tell them you are interested in refinancing the balance at a lower rate. If everything that you say is true, shouldn't be a problem. If they won't do it, go somewhere else. You certainly don't want to continue to give them your money if they don't want to help you.
We鈥檝e recently received offers from various banks/loans proposing a lower interest rate.
We want to stay with our current auto loan provider but want them to lower the interest rate鈥?is that possible? If so, how should we approach this request?|||you can always get a lower intrest rate according to my bank
i can get them to refinance it at a lower rate sooo..
try your bank after buying the car through the dealerships lender. if your bank wont refinance try your insurance company they may refinance it. I know State Farm Insurance refinances vehicles.
it also is based on downpayment,payment history, and your credit score.
then they may possibly fight to keep you as a customer by lowering your current intrest rate.
do your home work first.
Good Luck i hope this helps!!!|||Car Loan Guide: http://carloanguide.automobiledeals.info
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|||You signed a contract with a fixed interest rate for a certain period. The lender will reject your request for a lower rate leaving you no option but to continue to pay it. Alternatively, you might be able to get a line of credit with a bank at a lower rate, pay the car loan off and then pay off the bank loan with your former car loan payments. Be aware that many car loans have the interest front loaded. If you pay it off early you may be shocked that you would not have paid much interest going forward than if you simply kept the loan.
In other words getting a lower rate could prove to be more expensive.|||You walk in, tell them you have received offers of a lower interest rate, but you really want to stay with them, so what can they offer?
Their answer will dictate your next move.|||www.creditunion.coop
find your local credit union, and apply there, they have good rates.|||Flyboy is wrong.
Call your lender, tell them you are interested in refinancing the balance at a lower rate. If everything that you say is true, shouldn't be a problem. If they won't do it, go somewhere else. You certainly don't want to continue to give them your money if they don't want to help you.
What number is considered a high interest rate for a credit card?
Also, if you have a high interest rate does that mean you have bad credit?|||All credit card interest is considered high..lol. If you have great credit, you may qualify for 9.99%. If you have bad credit, you can go up to 20%. It's not all related to credit though. Some of the premium rewards cards will have higher interest rates. It helps pay for the rewards.|||Who cares what the interest rate is because you are going to pay off the balance every single month. Yes nd no on the bad credit with high interest rates.
Go here for your FREE annual credit reports http://www.annualcreditreport.com and you can see what your credit looks like|||If you pay the credit card liability by installments you will have to pay interest at 2% or even more per month. If one installment is not paid your will get reminders and charges will be added in addition to the interest. It is not advisable to opt for payment of the credit card dues in installment. Further, if the installments are not properly paid, your credit rating will be damaged.
Go here for your FREE annual credit reports http://www.annualcreditreport.com and you can see what your credit looks like|||If you pay the credit card liability by installments you will have to pay interest at 2% or even more per month. If one installment is not paid your will get reminders and charges will be added in addition to the interest. It is not advisable to opt for payment of the credit card dues in installment. Further, if the installments are not properly paid, your credit rating will be damaged.
How can we beat the banks and their greedy interest rate hikes?
Banks make massive profits and dream up justification for more and more interest rate rises to make their greedy shareholders and CEO's happy.
Everyone says there is nothing we can do about it.
Why don't we all black one bank say the cba and withdraw our money and switch our mortgages to another bank. If we could organise ourselves we could bring the greedy buggers down unless they offered fair interest rates. The shareholders (probably you lot) would have to take a hit for the good of first time home buyers.
How do we get organised?|||Because people are self-interested. Assume you get 3 million people to join up and start pulling their assets out of a bank. As this starts happening, the bank isn't going to just sit there idly. Instead they're going to start offering short-term incentives to get people to move assets to their bank like new account signing bonuses or 1 year low rates, etc. and either some of your 3 million or some of the other members of the population are going to take them up on it.
Once they're back to target numbers, its business as usual.
Money speaks louder than principles for most people.|||It isn't just the banks that cause this problem, it's also the gov't and their endless amount of bureaucracy.
For example, in theory a person living on an acreage property could accommodate a number of people living in a tent, caravan or simple shack.
If these people have an average income, combined they could save up enough money to buy another property/house, probably in a year or so, completely bypassing the need for banks.
Then start saving for the next one, and so on, until each one of them has their own home.
Gov't bureaucracy, red tape, the gazillion rules and regulations hinders that.
Gov't protect the rich. They make the rich richer and consequently, the poor poorer, because that money has to come from somewhere.
Everyone says there is nothing we can do about it.
Why don't we all black one bank say the cba and withdraw our money and switch our mortgages to another bank. If we could organise ourselves we could bring the greedy buggers down unless they offered fair interest rates. The shareholders (probably you lot) would have to take a hit for the good of first time home buyers.
How do we get organised?|||Because people are self-interested. Assume you get 3 million people to join up and start pulling their assets out of a bank. As this starts happening, the bank isn't going to just sit there idly. Instead they're going to start offering short-term incentives to get people to move assets to their bank like new account signing bonuses or 1 year low rates, etc. and either some of your 3 million or some of the other members of the population are going to take them up on it.
Once they're back to target numbers, its business as usual.
Money speaks louder than principles for most people.|||It isn't just the banks that cause this problem, it's also the gov't and their endless amount of bureaucracy.
For example, in theory a person living on an acreage property could accommodate a number of people living in a tent, caravan or simple shack.
If these people have an average income, combined they could save up enough money to buy another property/house, probably in a year or so, completely bypassing the need for banks.
Then start saving for the next one, and so on, until each one of them has their own home.
Gov't bureaucracy, red tape, the gazillion rules and regulations hinders that.
Gov't protect the rich. They make the rich richer and consequently, the poor poorer, because that money has to come from somewhere.
What is the variable student loan interest rate forecast for the foreseeable future during a depression?
What is the variable student loan interest rate forecast for the foreseeable future during a depression WITH high inflation?
Currently it is 1%-3%|||You can expect something in the neighborhood of 5%.
And - nobody said anything about a Depression.
Currently it is 1%-3%|||You can expect something in the neighborhood of 5%.
And - nobody said anything about a Depression.
The Fed lowers interest rates to 2 percent the 18th of March, what will the interest rate be for a mortgage?
Actually the interest rate for a 15y mortgage is about 5.5%. What is the interest going to be after March 18th.|||We don't expect the fed to drop it to 2%, may be lowering .5 or .75 is more likey.
The fed rate isn't relate to mortgage interest rates.
In fact, mortgage rates can and do often rise when the fed cuts rates.
We can never predict mortgage interest rates, they can change multiple times in a day.
Here's a good explanation from
Barry Habid, contributer to CNBC
So the Federal Reserve cut rates again. Many mortgage applicants are calling their mortgage representative
and expecting a lower interest rate. Others who have been waiting to refinance are puzzled as to why mortgage
rates have not moved lower during recent 5 Fed rate cuts. In fact mortgage rates are now higher than they
were before the Fed began cutting rates by in January. This is difficult to explain to many consumers who have
watched a 2.5% reduction by the Fed with no benefit in mortgage rates.
Is a Fed rate cut really good news for mortgage rates? The facts may be surprising. The Fed can only control
the Discount Rate and the Fed Funds Rate. This is very different from mortgage rates. A mortgage rate can be
in effect for 30-years, a rate that is set by the Fed can change from one day to another.
Another common mistake is in thinking that 30-year Treasury bonds or 10-year Treasury notes are directly
pegged to mortgage rates.
Those are government securities that are backed by the full faith and credit of the U.S. government and have
no direct effect on mortgage rates.
So what are mortgage rates based on? As it turns out the answer is mortgage-backed bonds known as
Mortgage Backed Securities (MBS). Bonds issued by Fannie Mae and Freddie Mac (MBS) and the trading
performance of those bonds will determine the direction of mortgage rates. Finding the catalyst that causes
mortgage bonds to move will give you the keys to finding out what makes mortgage rates rise or fall.
We know that inflation will always be a negative for any long-term bond because it eats away at the future
returns. Since the bond will pay a set amount over a long period of time, that amount will be less valuable if
inflation is high. Over the past several years, one catalyst that seems to be working in the opposite direction of
MBS prices is the Nasdaq and broader stock market.
As bond prices rise, interest rates fall. As bond prices fall, interest rates rise.|||The two are NOT directly linked.|||These two actions are not necessarily tied together. Fed lowering may not result in mortgage rate lowering. The risk of making mortgages has gone up and the rates could even rise. The 15-year may go down another .50 if the fed lowers .50 or .75. Capital is very tight now and lenders are very nervous.|||Claudio-
They are not directly related, but based on levels of unemployment, debt and inflation, most likely it will hurt the mortgages, for the next couple of days until the 18th investors will be more likely to put money on mortgage backed securities since they feel a little safe with the feds cutting another 0.50% so I would get pre-qualified now because rates will more likely to go down before, but after the 18th top economists and analysts feel that it will hurt the mortgage rates and in return they will go up. Now my company has also analyzed mortgage trends data over the last 26 years and we actually agree with it too.
Hope this helps
The fed rate isn't relate to mortgage interest rates.
In fact, mortgage rates can and do often rise when the fed cuts rates.
We can never predict mortgage interest rates, they can change multiple times in a day.
Here's a good explanation from
Barry Habid, contributer to CNBC
So the Federal Reserve cut rates again. Many mortgage applicants are calling their mortgage representative
and expecting a lower interest rate. Others who have been waiting to refinance are puzzled as to why mortgage
rates have not moved lower during recent 5 Fed rate cuts. In fact mortgage rates are now higher than they
were before the Fed began cutting rates by in January. This is difficult to explain to many consumers who have
watched a 2.5% reduction by the Fed with no benefit in mortgage rates.
Is a Fed rate cut really good news for mortgage rates? The facts may be surprising. The Fed can only control
the Discount Rate and the Fed Funds Rate. This is very different from mortgage rates. A mortgage rate can be
in effect for 30-years, a rate that is set by the Fed can change from one day to another.
Another common mistake is in thinking that 30-year Treasury bonds or 10-year Treasury notes are directly
pegged to mortgage rates.
Those are government securities that are backed by the full faith and credit of the U.S. government and have
no direct effect on mortgage rates.
So what are mortgage rates based on? As it turns out the answer is mortgage-backed bonds known as
Mortgage Backed Securities (MBS). Bonds issued by Fannie Mae and Freddie Mac (MBS) and the trading
performance of those bonds will determine the direction of mortgage rates. Finding the catalyst that causes
mortgage bonds to move will give you the keys to finding out what makes mortgage rates rise or fall.
We know that inflation will always be a negative for any long-term bond because it eats away at the future
returns. Since the bond will pay a set amount over a long period of time, that amount will be less valuable if
inflation is high. Over the past several years, one catalyst that seems to be working in the opposite direction of
MBS prices is the Nasdaq and broader stock market.
As bond prices rise, interest rates fall. As bond prices fall, interest rates rise.|||The two are NOT directly linked.|||These two actions are not necessarily tied together. Fed lowering may not result in mortgage rate lowering. The risk of making mortgages has gone up and the rates could even rise. The 15-year may go down another .50 if the fed lowers .50 or .75. Capital is very tight now and lenders are very nervous.|||Claudio-
They are not directly related, but based on levels of unemployment, debt and inflation, most likely it will hurt the mortgages, for the next couple of days until the 18th investors will be more likely to put money on mortgage backed securities since they feel a little safe with the feds cutting another 0.50% so I would get pre-qualified now because rates will more likely to go down before, but after the 18th top economists and analysts feel that it will hurt the mortgage rates and in return they will go up. Now my company has also analyzed mortgage trends data over the last 26 years and we actually agree with it too.
Hope this helps
How does credit card interest rate work?
I have always paid off my credit card balances in full every month, but on the next billing statement I won't be able to. My current balance is $1,413. My credit card interest rate is 14.49%. Is it true that I will be charged interest on my full balance even if I pay half the balance? I called my credit card company and the rep said yes, but I don't think she was very knowledgeable.|||The cc will charge you interest next month (i.e. after they learn you did not send in the full payment) for each purchase from the day of purchase until you paid them some money. Then they will charge you interest on the balance [ $706.50 ] for the whole month until the next billing cycle, plus interest on each new purchase from time of purchase until cut-off date (and then go to first line). They usually use a daily balance average and charge interest daily. So your answer is sort of yes, sort of no.|||That is an excellent question - I hope someone answers this!|||it works in the banks favor
How do I get a lower interest rate on a current credit card?
I have heard that you as a consumer can negotiate with credit card companies to reduce interest rate so that you can get them paid off. How do I go about that?|||You call the company that gave you the credit card and ask them to reduce the interest rate. If they say no, tell them that you are going to think about closing the card and see if they will then lower the interest.|||One way is to do a balance transfer to another credit card company which offers a lower rate of interest. Usually when you do a balance transfer you don鈥檛 have to pay a balance transfer fee and at times you may get a zero percent rate of interest for certain number of months. The next time you receive a telemarketing call from a credit card company ask them if they have this offer to do a balance transfer.
For negotiating with your existing credit card company you will need the services of debt consolidation companies.|||You need to call them. They are usually willing to negotiate if you have a proven history of paying your card on time.
Or you can transfer the balance to a new card with a lower interest rate and close out the account with the higher rate and get rid of the card.|||Very simple - call them. Call them and explain to them that you are a good customer, pay your bills on time, and that you would like a lower rate, or if not, then you will have to consider transferring what balance to another card that is offering a better rate - this usually always works.|||Call up the bank and ask them for it. 80% of the time, they claim no, but if your credit is good enough to get a balance xfer, tell them this, and see if they'll negotiate. Banks hate to lose good charging customers so they can charge fees. LOL.|||call em up and tell them if you can lower the intrest rate|||http://www.ratemykitten.com/|||The best thing to do is call the credit card company - talk to them say you want a lower interest rate because you got a offer from another credit card company at a much lower rate -- but you like dealing with them. If they don't lower your rate you can always get another credit card and transfer the balance from the old card to the new one. Ifound some great cards here
http://www.dgftaworld.net/credit/America鈥?/a>
Say hello to the newest Blue - BLUE CASH from American Express. With up to 5% cash back, no annual fee, and a range of intelligent benefits, it's the complete package. All in one Card. 5% Back on Gas, Up to 5% cash back on eligible purchases, No Annual Fee, 0% Introductory APR for 6 months.|||CALL THE CREDIT COMP. AND ASK THEM IF THEY WOULD BE ABLE TO LOWER YOU RATE.|||If you are a good paying customer, and have a good rating with this credit card, you can send them a letter reminding them that you are a good customer, and think you deserve a better rate. Remind them that you will be forced to look for a credit card with a better rate if they don't work with you on it.
If you are a not so great customer, you can send them a letter telling the credit card company that you are having trouble paying your bills and that you are overextended at the moment. You can ask them for a lower interest rate, or for them to not charge you an interest rate for a certain period of time so you can pay off your debt to them and avoid filing bankruptcy. Trust me, they don't want you to file bankruptcy, they will lose if you do.|||It all depends on your credit history and your payment history with the credit card company. You have very little chance to convince them to lower the interest rate, its basically impossible unless you have a very high outstanding balance with them ($5000+).|||max out yr cards|||Call the 1800 at the back of the card. Request customer service. They should put you in the correct direction.
Good Luck. Be persistent. They will try make this difficult for you. By law they have to negotiate it. But after that, make sure to make your monthly payments on time. If you don't. Expect your bills to rocket. Kind of a double edge sword.|||A balance transfer could work, but then you'll still have a bill with perhaps a high rate. You can actually call the company and request a lower rate. Often that really does work. Another thing is this: If you want/need a better credit score, you can request a higher balance limit--just be careful not to run the card up. But your balance-to-threshold ratio affects your credit score. FOr example, if your limit is 2000 and your balance is 1900, then your score will be negatively affected. But if your limit is 5000 and you owe 1900, it's cool.|||Speak to your credit card company. They will lend a sympathetic ear. Make it clear that you will transfer your balance if they do not lower your APR. You will be surprised but if your facts regarding the APR that you will get from another bank is correct, your credit card company will be willing to lower your APR.
For negotiating with your existing credit card company you will need the services of debt consolidation companies.|||You need to call them. They are usually willing to negotiate if you have a proven history of paying your card on time.
Or you can transfer the balance to a new card with a lower interest rate and close out the account with the higher rate and get rid of the card.|||Very simple - call them. Call them and explain to them that you are a good customer, pay your bills on time, and that you would like a lower rate, or if not, then you will have to consider transferring what balance to another card that is offering a better rate - this usually always works.|||Call up the bank and ask them for it. 80% of the time, they claim no, but if your credit is good enough to get a balance xfer, tell them this, and see if they'll negotiate. Banks hate to lose good charging customers so they can charge fees. LOL.|||call em up and tell them if you can lower the intrest rate|||http://www.ratemykitten.com/|||The best thing to do is call the credit card company - talk to them say you want a lower interest rate because you got a offer from another credit card company at a much lower rate -- but you like dealing with them. If they don't lower your rate you can always get another credit card and transfer the balance from the old card to the new one. Ifound some great cards here
http://www.dgftaworld.net/credit/America鈥?/a>
Say hello to the newest Blue - BLUE CASH from American Express. With up to 5% cash back, no annual fee, and a range of intelligent benefits, it's the complete package. All in one Card. 5% Back on Gas, Up to 5% cash back on eligible purchases, No Annual Fee, 0% Introductory APR for 6 months.|||CALL THE CREDIT COMP. AND ASK THEM IF THEY WOULD BE ABLE TO LOWER YOU RATE.|||If you are a good paying customer, and have a good rating with this credit card, you can send them a letter reminding them that you are a good customer, and think you deserve a better rate. Remind them that you will be forced to look for a credit card with a better rate if they don't work with you on it.
If you are a not so great customer, you can send them a letter telling the credit card company that you are having trouble paying your bills and that you are overextended at the moment. You can ask them for a lower interest rate, or for them to not charge you an interest rate for a certain period of time so you can pay off your debt to them and avoid filing bankruptcy. Trust me, they don't want you to file bankruptcy, they will lose if you do.|||It all depends on your credit history and your payment history with the credit card company. You have very little chance to convince them to lower the interest rate, its basically impossible unless you have a very high outstanding balance with them ($5000+).|||max out yr cards|||Call the 1800 at the back of the card. Request customer service. They should put you in the correct direction.
Good Luck. Be persistent. They will try make this difficult for you. By law they have to negotiate it. But after that, make sure to make your monthly payments on time. If you don't. Expect your bills to rocket. Kind of a double edge sword.|||A balance transfer could work, but then you'll still have a bill with perhaps a high rate. You can actually call the company and request a lower rate. Often that really does work. Another thing is this: If you want/need a better credit score, you can request a higher balance limit--just be careful not to run the card up. But your balance-to-threshold ratio affects your credit score. FOr example, if your limit is 2000 and your balance is 1900, then your score will be negatively affected. But if your limit is 5000 and you owe 1900, it's cool.|||Speak to your credit card company. They will lend a sympathetic ear. Make it clear that you will transfer your balance if they do not lower your APR. You will be surprised but if your facts regarding the APR that you will get from another bank is correct, your credit card company will be willing to lower your APR.
What is a good interest rate on a personal loan?
I am a college student that has no federal loan at this current time and I need to take out a personal loan for $1000.00 or so. (I only really need 800) I have excellent credit and I was wondering what a good interest rate on a personal loan is? I have looked several places, and with this economy, there's not that many good deals left.
Also, if you could tell me where you found these rates that would be great! Thank you!|||In the US, with very good credit rating you can often get a personal loan for between 10-15% interest rate. Unless you have a lot of credit history a personal unsecured loan at a good rate may be very hard to get. If you can your best bet would be to use a studant loan because they normally have very low interest rates and a long payoff period. If this is a short term loan and you have very good credit you may be able to get a 1 year 0% interest rate credit card. The catch is that if you fail to pay the card off by the end of the promotional period your rates will most likely shot up, often 29+%.|||Is your college associated with a credit union? If so, check their rates. They are often better than bank rates. Even if your college isn't directly associated with a CU, check around for ones in your area and compare. You might have to invest $50 to open a savings account to become a member and get a loan, but the savings in interest will pay that back.
Also, if you could tell me where you found these rates that would be great! Thank you!|||In the US, with very good credit rating you can often get a personal loan for between 10-15% interest rate. Unless you have a lot of credit history a personal unsecured loan at a good rate may be very hard to get. If you can your best bet would be to use a studant loan because they normally have very low interest rates and a long payoff period. If this is a short term loan and you have very good credit you may be able to get a 1 year 0% interest rate credit card. The catch is that if you fail to pay the card off by the end of the promotional period your rates will most likely shot up, often 29+%.|||Is your college associated with a credit union? If so, check their rates. They are often better than bank rates. Even if your college isn't directly associated with a CU, check around for ones in your area and compare. You might have to invest $50 to open a savings account to become a member and get a loan, but the savings in interest will pay that back.
How does the federal interest rate work?
Please explain what the federal interest rate is and how it effects the U.S. economy. What are effects of raising the rate and what are the effects of lowering it?|||In the United States, the "fed rate", or federal funds rate is the interest rate at which banks borrow money at the Federal Reserve or lend it to other banks.
What happens when the Fed lowers this rate?
Banks will have access to fresh money at a lower cost, meaning that they have themselves more money available to lend out, and also at a lower cost. This is could for all participants in the economy: industrial companies have it easier to find money to invest, mortgages go down, etc.
As a result the economy will expand, make more profit in the long term. The stock market of course anticipates this and goes up.
On the other hand, lending out dollars will return a lower interest rate than before: the dollar goes down.
What happens when the Fed lowers this rate?
Banks will have access to fresh money at a lower cost, meaning that they have themselves more money available to lend out, and also at a lower cost. This is could for all participants in the economy: industrial companies have it easier to find money to invest, mortgages go down, etc.
As a result the economy will expand, make more profit in the long term. The stock market of course anticipates this and goes up.
On the other hand, lending out dollars will return a lower interest rate than before: the dollar goes down.
Can someone explain the difference between interest rate and APR?
For example, if the loan amount is 10,000 and the interest rate is 8%, what is the apr and how do you calculate it?|||APR is the effective interest rate taking into account fees, loan discounts and loan premiums.|||APR is a legal term the govt created to make it hard for companies to play shennanigans with what they call their interest rates.
With reputable companies, they are close to the same thing.|||APR includes the fees, which you haven't disclosed.
With reputable companies, they are close to the same thing.|||APR includes the fees, which you haven't disclosed.
What does the annual interest rate amount to?
When you take out a simple interest loan on a product costing 699.00 at 8.25 percent that is 90 days same as cash. What does the annual interest rate amount to when you pay the loan back 17 days after the 90 days same as cash?|||8.25%|||If you don't pay in full by 90 days, interest will be recalculated from day 1. Interest will be about $17. Interest is quoted as an annual %age. So, take .0825 divide by 365 and you get a DAILY interest rate. The amount of interest charged daily on the balance. Multiply that figure by 107 days and then by the loan amount ($699).
(.0825 / 365) * 107 days * $699 = $16.93 interest added to the loan amount. So you'll pay back about $716. The annual interest is still 8.25% but you only pay interest on the money for the time you have an outstanding balance.|||If your contract states that "90 days same as cash" that means that if you PAY within the first 90 days of the purchase that THERE is no INTEREST charged. After 90 days - (the 3rd month) the contract reverts to Principal - Plus interest payments. So if you paid within 17 days - there will be no interest.|||Someone that beautiful shouldn't have to pay back a loan. Hope you find your answer.
(.0825 / 365) * 107 days * $699 = $16.93 interest added to the loan amount. So you'll pay back about $716. The annual interest is still 8.25% but you only pay interest on the money for the time you have an outstanding balance.|||If your contract states that "90 days same as cash" that means that if you PAY within the first 90 days of the purchase that THERE is no INTEREST charged. After 90 days - (the 3rd month) the contract reverts to Principal - Plus interest payments. So if you paid within 17 days - there will be no interest.|||Someone that beautiful shouldn't have to pay back a loan. Hope you find your answer.
What bank offers the best interest rate for savings accounts?
I used to bank with Washington Mutual, and my savings account earned great interest--I think it was 5%. Now that I'm at Chase, I earn 0.1% interest, which is essentially nothing. Are there any banks or other savings account options that are actually paying a solid interest rate? Or is just a sign of the poor economy?|||I bank with a credit union where I live. They give 3.25% on a checking account of theirs up to $50,000 and 7.5% on a savings account of theirs up to $750.|||Credit Union is the best place to put your money at this time.
What number is considered a high interest rate for a credit card?
And is a high interest rate only given to people with low or bad credit?|||I have read in here that some people have cards that charge them 59% interest! LOL
Typically, an interest rate that is 20% or above is considered high. Most who have either OK credit or even bad will be getting the higher rate.|||ive seen some around 14 - 21.9
Typically, an interest rate that is 20% or above is considered high. Most who have either OK credit or even bad will be getting the higher rate.|||ive seen some around 14 - 21.9
What is the standard interest rate for a car loan?
I am just curious as to what most banks do when charging interest on a car loan.
Is it prime plus 2%? Is it prime plus 3%? I understand that it would depend on if you're looking for a fixed or variable interest rate, but I'm just curious as to the percentage for either.|||They are almost always fixed rate loans so although they might use prime as a reference, the rate won't be variable. Typical car loans right now are about 6.9% for new cars and 8-9% for used.|||Generally the companies offer interest rates on the basis of
1. Credit Score
2. Down payment amount
3. Loan term
When i applied for the loan the application form asked for all these above and based on that they offered me the loan amount with their interest rates.
But as i opt for used cars they offered me really low interest rates. So going on the try out here http://www.auto-financed.com from where i took a loan.|||interest rate on auto loans varies according to:
1. the credit worthiness of the borrower
2. the model year of the vehicle being purchased
3. the term of the loan (length of time being financed)
4. the lending institiution
each bank has it's own formula for determining rate.|||I have been offered car loans ranging from 7% to a stupidly high 56% from various companies.
the best idea is to speak with your bank and see what they can offer you, or do what i did and save for a few months and just buy with cash.
Is it prime plus 2%? Is it prime plus 3%? I understand that it would depend on if you're looking for a fixed or variable interest rate, but I'm just curious as to the percentage for either.|||They are almost always fixed rate loans so although they might use prime as a reference, the rate won't be variable. Typical car loans right now are about 6.9% for new cars and 8-9% for used.|||Generally the companies offer interest rates on the basis of
1. Credit Score
2. Down payment amount
3. Loan term
When i applied for the loan the application form asked for all these above and based on that they offered me the loan amount with their interest rates.
But as i opt for used cars they offered me really low interest rates. So going on the try out here http://www.auto-financed.com from where i took a loan.|||interest rate on auto loans varies according to:
1. the credit worthiness of the borrower
2. the model year of the vehicle being purchased
3. the term of the loan (length of time being financed)
4. the lending institiution
each bank has it's own formula for determining rate.|||I have been offered car loans ranging from 7% to a stupidly high 56% from various companies.
the best idea is to speak with your bank and see what they can offer you, or do what i did and save for a few months and just buy with cash.
What should I expect for an interest rate on a new truck in Massachusetts?
My husband and I have really good credit. What is a fair interest rate to pay for a 5 or 6 year car loan?|||While I can't give you any specific rates, I will make this recommendation. If you're a member of any credit union go to them first. Most credit unions and banks will give you a better rate than the car dealership. Also keep in mind that the depreciation on a new car will leave you owing more than it's worth toward the end of a 5 year loan. You can save a lot of money by buying a used truck even one just 1 year old. Your new truck value will drop $1000s as soon as you drive off the lot.
"...So a brand-spanking-new car or truck loses thousands of dollars of value as soon as you drive it home. ..." *
Whatever you decide, I hope you enjoy the truck.|||NJ-
The #1 selling truck for the past 30 years is a Ford F-series pick-up.
FMCC happens to be offering 0% financing for 60 mo.loans right now to people with good credit like yourself.
0% is about as fair as fair can be! If it were any fairer they'd be giving you the loan for FREE!
Oh wait.....THEY ARE !
(Don't sell yourself short %26amp; don't listen to the 'Ford vs Chevy' war mongers. Facts are Facts %26amp; opinions are opinions.
Ford vs Chevy...Foreign vs Domestic.....blah.....blah...blah...blah
go %26amp; compare- decide for yourself----)
But DO NOT pay interest on a 60 month loan whatever you decide !
oh yea, should you decide to buy a "Ford Certified Pre-Owned" , FMCC (again ) offers 4.9% for 60 months !|||check www.bankrate.com, also lending tree dot com will give you four offers for no charge.
"...So a brand-spanking-new car or truck loses thousands of dollars of value as soon as you drive it home. ..." *
Whatever you decide, I hope you enjoy the truck.|||NJ-
The #1 selling truck for the past 30 years is a Ford F-series pick-up.
FMCC happens to be offering 0% financing for 60 mo.loans right now to people with good credit like yourself.
0% is about as fair as fair can be! If it were any fairer they'd be giving you the loan for FREE!
Oh wait.....THEY ARE !
(Don't sell yourself short %26amp; don't listen to the 'Ford vs Chevy' war mongers. Facts are Facts %26amp; opinions are opinions.
Ford vs Chevy...Foreign vs Domestic.....blah.....blah...blah...blah
go %26amp; compare- decide for yourself----)
But DO NOT pay interest on a 60 month loan whatever you decide !
oh yea, should you decide to buy a "Ford Certified Pre-Owned" , FMCC (again ) offers 4.9% for 60 months !|||check www.bankrate.com, also lending tree dot com will give you four offers for no charge.
What is a good interest rate for a credit card?
I was offered a credit card that has a 13% interest rate. This seems high to me because they told my that my credit rating is over 700. Should I be looking for a better deal?|||There are two routes you can go for a low interest card.
1) 0 apr Intro rate - the intro is good for 3 - 16 months. The term is determined by your credit score. For example if you read up to 12 months it mean that you could be assigned 3, 6, 9, or 12 months of 0 apr.
2) fixed rate would mean the interest rate would remain the same. A 9.9% fixed is a good deal for people that revolve their credit balances every month.
13% is a lot better than most credit cards offer. You may want to take it or try for a lower fixed rate. You could apply for a card with a lower fixed interest rate, and see if you get approved. If you don't get it you can take the other offer for 13%. I am assuming that card offer was a pre approved offer. I hope this answers your question.|||That's about average. You can get 0% but that only usually lasts for about 6 months. 13% isn't horrible. You should see some of the other rates credit card companies are offering... Some are better and some are worse. Check for yourself.|||As far as you are concerned, the interest rate could be 100%.
You don't need to pay interest on cards - so it does not matter.
Carrying balances can destroy your credit - never do it.
Just use your card for things you need like food or gas, and pay for it in full.
Look for 1% cash back rewards. I made over $250/ year cash back, I have 2 cards with different rewards ---- free money.
/|||If you pay your balance in full every month, the actual rate makes no difference, since you don't pay any interest. I'd look for other factors like a cash back reward.|||Most credit cards offer interest rates at 16% or more.|||7.5% or less.
1) 0 apr Intro rate - the intro is good for 3 - 16 months. The term is determined by your credit score. For example if you read up to 12 months it mean that you could be assigned 3, 6, 9, or 12 months of 0 apr.
2) fixed rate would mean the interest rate would remain the same. A 9.9% fixed is a good deal for people that revolve their credit balances every month.
13% is a lot better than most credit cards offer. You may want to take it or try for a lower fixed rate. You could apply for a card with a lower fixed interest rate, and see if you get approved. If you don't get it you can take the other offer for 13%. I am assuming that card offer was a pre approved offer. I hope this answers your question.|||That's about average. You can get 0% but that only usually lasts for about 6 months. 13% isn't horrible. You should see some of the other rates credit card companies are offering... Some are better and some are worse. Check for yourself.|||As far as you are concerned, the interest rate could be 100%.
You don't need to pay interest on cards - so it does not matter.
Carrying balances can destroy your credit - never do it.
Just use your card for things you need like food or gas, and pay for it in full.
Look for 1% cash back rewards. I made over $250/ year cash back, I have 2 cards with different rewards ---- free money.
/|||If you pay your balance in full every month, the actual rate makes no difference, since you don't pay any interest. I'd look for other factors like a cash back reward.|||Most credit cards offer interest rates at 16% or more.|||7.5% or less.
How can I lower my interest rate without refinancing it?
I have bought a used car about two year ago and the interest rate was high. It was actually a trade in for a used car. Now I want to see if I can get a lower interest for my car without refinancing it.
If I have to refinance it to get a lower interest, what are the cons?|||I suppose you can beg the lender for a lower rate, but the rates are called "fixed" for a reason. Considering how low the fed cut the rates to, there's really no con to refinancing unless you get a loan from a shady company.|||Nope. You can't simply get the loan company to lower your rate.
If your credit score has improved dramatically in two years, you might be able to refinance and get a lower rate, but remember that in two years, your payments have been largely interest, and you have already paid much of the interest on that loan. If you refinance, you start all over again paying interest, even though at a lower rate. Here's an article that has some more details:
http://www.leaseguide.com/Articles/auto-鈥?/a>
.|||No. You signed a contract to borrow money at a certain interest rate to buy your car. The contract can't be changed once it has been executed. The lender makes their money from the interest you pay, and now 2 years down the road you want to change the rules to suit you? The only way to get a lower rate (usually in exchange for a longer term) is to refinance. That pays off the current loan and puts you in a new loan.
If I have to refinance it to get a lower interest, what are the cons?|||I suppose you can beg the lender for a lower rate, but the rates are called "fixed" for a reason. Considering how low the fed cut the rates to, there's really no con to refinancing unless you get a loan from a shady company.|||Nope. You can't simply get the loan company to lower your rate.
If your credit score has improved dramatically in two years, you might be able to refinance and get a lower rate, but remember that in two years, your payments have been largely interest, and you have already paid much of the interest on that loan. If you refinance, you start all over again paying interest, even though at a lower rate. Here's an article that has some more details:
http://www.leaseguide.com/Articles/auto-鈥?/a>
.|||No. You signed a contract to borrow money at a certain interest rate to buy your car. The contract can't be changed once it has been executed. The lender makes their money from the interest you pay, and now 2 years down the road you want to change the rules to suit you? The only way to get a lower rate (usually in exchange for a longer term) is to refinance. That pays off the current loan and puts you in a new loan.
What is the monthly interest rate on an Australian ING Direct Savings Account?
They give you the annual interest rate, but interest is calculated monthly so what rate do they use to calculate the monthly interest, or if they don't have a monthly rate how does it work?|||if you have the annual rate, divide by 12 - that's a close enough estimate
What is a reasonable interest rate for department store credit cards?
I want to call and ask for a reduction. The interest rates are crazy! What is a reasonable rate??|||Highly unlikely for a store card to lower the rate, but "reasonable" for a store card would be between 12-15 percent. If you can transfer the balance to a lower-interest credit card or one with a very low introductory rate then pay it off quickly, that may be your best option.
Credit card debt will eat your soul if you don't pay the balance in full every month. Work hard to beat the credit card companies and WIN over debt!
Unfortunately, people get sucked into 0% on Sears, Home Depot, Best Buy, and other stores every day hoping to pay it off before the high interest kicks in. Then life throws a curve ball. Of course, it is best to save up for items and have an emergency fund to cover major expenses.|||Department store cards all tend to have a high interest rate. It is unlikely that you will get a reduction. The rates tend to be a one size fits all and creditworthiness doesn't come into play.
Check into a major credit card instead. Your interest and limit will be based on your credit history and you can find much better deals.
By the way, why would you carry balances on a store card? The only reason to even have one is to take advantage of special discounts and sales for account holders.
Credit card debt will eat your soul if you don't pay the balance in full every month. Work hard to beat the credit card companies and WIN over debt!
Unfortunately, people get sucked into 0% on Sears, Home Depot, Best Buy, and other stores every day hoping to pay it off before the high interest kicks in. Then life throws a curve ball. Of course, it is best to save up for items and have an emergency fund to cover major expenses.|||Department store cards all tend to have a high interest rate. It is unlikely that you will get a reduction. The rates tend to be a one size fits all and creditworthiness doesn't come into play.
Check into a major credit card instead. Your interest and limit will be based on your credit history and you can find much better deals.
By the way, why would you carry balances on a store card? The only reason to even have one is to take advantage of special discounts and sales for account holders.
At what interest rate would you be indifferent between these 2 refrigerators?
Two refrigerators are available for purchase. One costs more to buy but less to operate.
Price Oper. Costs/year
A $400 $100
B 340 120
At what interest rate would you be indifferent between the two machines if they last three years?|||you can figure this out by multiplying the payment by term..It's not the rate over all that will cost you, term of the loan will play a factor|||I'm confused... are we talking about interest rate or operating cost? They're not the same thing by any stretch of the imagination.
Unless we're talking an extremely high retail price, (upwards of $2000, which would make saving money on operating costs and entirely moot point) I would always choose the one with the lower operating cost. Refrigerators can last for decades. The initial price is a one-time cost, but operating costs last the lifetime of the appliance.
Price Oper. Costs/year
A $400 $100
B 340 120
At what interest rate would you be indifferent between the two machines if they last three years?|||you can figure this out by multiplying the payment by term..It's not the rate over all that will cost you, term of the loan will play a factor|||I'm confused... are we talking about interest rate or operating cost? They're not the same thing by any stretch of the imagination.
Unless we're talking an extremely high retail price, (upwards of $2000, which would make saving money on operating costs and entirely moot point) I would always choose the one with the lower operating cost. Refrigerators can last for decades. The initial price is a one-time cost, but operating costs last the lifetime of the appliance.
What's the difference between an interest rate and annual percentage yield?
When I open a CD or look for mortage rates, they always list the interest rate and the APR and most times the numbers vary a little.|||The rate and APY vary slightly, because of compounding. If you are being paid 10% interest annually on $500, you'd earn $50, right? Only if you are paid the interest at the end of the year.
If you compound it monthly, however, you'd end up with $52.36 in interest, for an effective APY of 10.472.
They are required to disclose this stuff, so that if they are telling you 5% APY, you are really getting a 4.8% rate that with compounding gets you an effective 5.0%.|||Yes the interest rate is the rate of interest charged just on the loan amount. Your APR is the amount of interest charged on the full balance of everything (loan amount + closing costs) so it does increase the rate slightly. Not too much of a difference and honestly it will not affect the perameters of the loan a whole lot. If you have any other questions feel free to email me, I have been a loan officer for 4+ years....
sstewart@pmflenders.com
If you compound it monthly, however, you'd end up with $52.36 in interest, for an effective APY of 10.472.
They are required to disclose this stuff, so that if they are telling you 5% APY, you are really getting a 4.8% rate that with compounding gets you an effective 5.0%.|||Yes the interest rate is the rate of interest charged just on the loan amount. Your APR is the amount of interest charged on the full balance of everything (loan amount + closing costs) so it does increase the rate slightly. Not too much of a difference and honestly it will not affect the perameters of the loan a whole lot. If you have any other questions feel free to email me, I have been a loan officer for 4+ years....
sstewart@pmflenders.com
How much interest rate does wells fargo charge?
I need a small loan of like 500 dollars. Does anyone know what their interest rate is?|||Try a credit union instead! They usually offer lower rates and fewer fees, and the credit union I work at does loans as small as $250.|||Do you have anything of value?
Take it to a pawn shop and they will give you a short term loan.
Fail to pay back - they simply keep the items.
Or trade the items in for cash.
Banks don't make such small loans- not enough profit after all the paperwork|||Zero as they don't offer loans that small.|||Try a Credit Union. With such a small principal amount, it shouldn't be a high risk loan.
Sell your non-necessary items on eBay.
Most companies offer loans starting from $1,000.
Take it to a pawn shop and they will give you a short term loan.
Fail to pay back - they simply keep the items.
Or trade the items in for cash.
Banks don't make such small loans- not enough profit after all the paperwork|||Zero as they don't offer loans that small.|||Try a Credit Union. With such a small principal amount, it shouldn't be a high risk loan.
Sell your non-necessary items on eBay.
Most companies offer loans starting from $1,000.
Assuming the interest rate is positive and constant over the next 10 years, when should he prefer to receive t?
An investor is given the opportunity to invest money today and receive $10,000 either 5 years from now or 10 years from now. Assuming the interest rate is positive and constant over the next 10 years, when should he prefer to receive the money? Why?|||If the investor has the choice of getting a $10,000 return on the investment in either 5 years or 10 years, he/she should choose getting that return in 5 years. He/she gets the same $10,000 back under either option. Getting it back sooner means he/she can reinvest it again.
----------------
We generally live in inflationary times. It's better to have $10,000 in five years than $10,000 in 10 years. The purchasing power of $10,000 will decrease over the five year difference in payment times.
----------------
We generally live in inflationary times. It's better to have $10,000 in five years than $10,000 in 10 years. The purchasing power of $10,000 will decrease over the five year difference in payment times.
Who can give me a lower mortgage interest rate and monthly payments in Austin?
Assuming the credit rate is excellent and falls under high income. Also the house price would be under 300k. If there are any mortgage lenders, could you suggest what is the current interest rate that you could estimate?
Thank you.|||how much money are you putting down and what terms do you want, 30 year fixed, 15 year fixed, FHA/VA, conventional or USDA?
Thank you.|||how much money are you putting down and what terms do you want, 30 year fixed, 15 year fixed, FHA/VA, conventional or USDA?
Assuming the interest rate is positive and constant over the next 10 years, when should he prefer to receive t?
An investor is given the opportunity to invest money today and receive $10,000 either 5 years from now or 10 years from now. Assuming the interest rate is positive and constant over the next 10 years, when should he prefer to receive the money? Why?|||Recall the formula for the present value of a single cash flow at the end of period t:
PV = x*(1+i)^-t, where:
PV = present value
x = cash flow at time t
i = effective periodic interest rate (expressed as a decimal, not a percent)
Assuming that i%26gt;0, (1+i)^-t decreases as t increases. Therefore, the PV of a given cash flow at time t decreases as t increases. In other words, the required investment at time 0 in order to get a cash flow at time t gets smaller as the cash flow gets later. Therefore, the investor would prefer to get the $10,000 in 10 years, rather than 5 years.
Please vote for my answer if I helped you, and you would like me to keep helping you.
PV = x*(1+i)^-t, where:
PV = present value
x = cash flow at time t
i = effective periodic interest rate (expressed as a decimal, not a percent)
Assuming that i%26gt;0, (1+i)^-t decreases as t increases. Therefore, the PV of a given cash flow at time t decreases as t increases. In other words, the required investment at time 0 in order to get a cash flow at time t gets smaller as the cash flow gets later. Therefore, the investor would prefer to get the $10,000 in 10 years, rather than 5 years.
Please vote for my answer if I helped you, and you would like me to keep helping you.
How do I find the effective annual interest rate?
Suppose that a bank provides an annual interest rate of 8% that is compounded continuously. Determine the effective annual interest rate (in percentage).
I know that the effective annual interest rate is an amount being compounded annually instead of being compounded continuously but I still can't figure this out. Help would be appreciated.|||Whenever you're asked to find an equivalent rate, you need to set the accumulated value of $1 at one rate equal to the accumulated value of $1 at the rate you're solving for. Both accumulated values must be over the same time period.
Let i = effective annual interest rate.
The accumulated value of $1 at the end of 1 year at effective annual interest rate i is 1 + i.
The accumulated value of $1 at the end of 1 year at continuous interest rate 8% is e^(.08).
Setting the accumulated values equal to each other:
1 + i = e^(.08)
i = e^(.08) - 1 = 0.083287068
Therefore, the effective annual interest rate is 8.3287068%.|||To convert this into an annual rate, use $1 as your original investment, and calculate the continuous interest after 1 year.
Your answer minus the original dollar will give you your effective annual rate. I'm getting: 8.3237% (but I used an internet calculator, you might want to do it long-hand to check my work.
I know that the effective annual interest rate is an amount being compounded annually instead of being compounded continuously but I still can't figure this out. Help would be appreciated.|||Whenever you're asked to find an equivalent rate, you need to set the accumulated value of $1 at one rate equal to the accumulated value of $1 at the rate you're solving for. Both accumulated values must be over the same time period.
Let i = effective annual interest rate.
The accumulated value of $1 at the end of 1 year at effective annual interest rate i is 1 + i.
The accumulated value of $1 at the end of 1 year at continuous interest rate 8% is e^(.08).
Setting the accumulated values equal to each other:
1 + i = e^(.08)
i = e^(.08) - 1 = 0.083287068
Therefore, the effective annual interest rate is 8.3287068%.|||To convert this into an annual rate, use $1 as your original investment, and calculate the continuous interest after 1 year.
Your answer minus the original dollar will give you your effective annual rate. I'm getting: 8.3237% (but I used an internet calculator, you might want to do it long-hand to check my work.
How do you find the interest rate to these math problems?
**A sum of $4000 invested for four years and the interest rate was compounded quarterly. If the sum amounted to $4588.33 after the given time, what is the interest rate?
**Two cities, lie on the same meridian, one is found at 20 degrees S and the other 27 degrees S. Find the distance between these cities with a circumference of the earth of 3960 miles.|||Second Question:
Create a ratio:
7 (degrees between cities) x (miles between cities)
--------------------------------------鈥? = ----------------------------------------鈥?
180 (degrees in entire world) 3,960 (miles around entire world)
Cross multiply: 180x= 27,720
Divide both sides by 180: x=154.
Cities are 154 miles apart
**Two cities, lie on the same meridian, one is found at 20 degrees S and the other 27 degrees S. Find the distance between these cities with a circumference of the earth of 3960 miles.|||Second Question:
Create a ratio:
7 (degrees between cities) x (miles between cities)
--------------------------------------鈥? = ----------------------------------------鈥?
180 (degrees in entire world) 3,960 (miles around entire world)
Cross multiply: 180x= 27,720
Divide both sides by 180: x=154.
Cities are 154 miles apart
How do I calculate the nominal interest rate?
Annual interest rate is .15% How do I find the nominal interest rate?
If you deposit $2000 in this account, how much will be in the account after five years? Assuming that the current rate stays constant for the life of your deposit. Thank you.|||While talking about compound interest, whatever annual interest rate that is charged is called Nominal interest rate. However, if interest is monthly/quarterly/daily compounded whatever annual rate that is practically coming into effect would be different (slightly higher than the nominal rate). That rate is called Effective Rate of interest.
For example, if nominal rate is r = 12% and if interest is monthly compounded, the monthly rate would be 12/12 = 1%. And so, a sum of $100 will in 12 months be 100(1+r/12)^12 = 100(1.01)^12 = $112.68. Thus had the interest been annual, a rate equivalent to the above would be 12.68%. Thus the effective rate of interest is e = 12.68%. Note that nominal rate is r = 12%.
Formula
e = (1+r/12)^12 - 1 in the case of monthly compounding.
e = (1+r/4)^4 - 1 in the case of quarterly compounding.
e = (1+r/2)^2 - 1 in the case of half-yearly compounding.
e = (1+r/365)^365 - 1 in the case of daily compounding.
e = e^r - 1 in the case of continuous compounding.
If you deposit $2000 in this account, how much will be in the account after five years? Assuming that the current rate stays constant for the life of your deposit. Thank you.|||While talking about compound interest, whatever annual interest rate that is charged is called Nominal interest rate. However, if interest is monthly/quarterly/daily compounded whatever annual rate that is practically coming into effect would be different (slightly higher than the nominal rate). That rate is called Effective Rate of interest.
For example, if nominal rate is r = 12% and if interest is monthly compounded, the monthly rate would be 12/12 = 1%. And so, a sum of $100 will in 12 months be 100(1+r/12)^12 = 100(1.01)^12 = $112.68. Thus had the interest been annual, a rate equivalent to the above would be 12.68%. Thus the effective rate of interest is e = 12.68%. Note that nominal rate is r = 12%.
Formula
e = (1+r/12)^12 - 1 in the case of monthly compounding.
e = (1+r/4)^4 - 1 in the case of quarterly compounding.
e = (1+r/2)^2 - 1 in the case of half-yearly compounding.
e = (1+r/365)^365 - 1 in the case of daily compounding.
e = e^r - 1 in the case of continuous compounding.
What is the difference between APY and interest rate?
Also, how does interest rate work, meaning like how long do I have to leave my money in the bank to get that interest?|||Here is an article from investopedia. One (APY) assumes compounding of interest, the other (APR) does not.
Defining APR and APY
APR is the annual rate of interest without taking into account the compounding of interest within that year. Alternatively, APY does take into account the effects of intra-year compounding. This seemingly subtle difference can have important implications for investors and borrowers. Here is a look at the formulas for each method:
For example, a credit card company might charge 1% interest each month; therefore the APR would equal 12% (1% x 12 months = 12%). This differs from APY, which takes into account compound interest. The APY for a 1% rate of interest compounded monthly would be [(1 + 0.01)^12 鈥?1= 12.68%] 12.68% a year. If you only carry a balance on your credit card for one month's period you will be charged the equivalent yearly rate of 12%. However if you carry that balance for the year, your effective interest rate becomes 12.68% as a result of the compounding each month.
Defining APR and APY
APR is the annual rate of interest without taking into account the compounding of interest within that year. Alternatively, APY does take into account the effects of intra-year compounding. This seemingly subtle difference can have important implications for investors and borrowers. Here is a look at the formulas for each method:
For example, a credit card company might charge 1% interest each month; therefore the APR would equal 12% (1% x 12 months = 12%). This differs from APY, which takes into account compound interest. The APY for a 1% rate of interest compounded monthly would be [(1 + 0.01)^12 鈥?1= 12.68%] 12.68% a year. If you only carry a balance on your credit card for one month's period you will be charged the equivalent yearly rate of 12%. However if you carry that balance for the year, your effective interest rate becomes 12.68% as a result of the compounding each month.
Why do people say a Fed interest rate cut is printing money?
When the Fed cuts its rate, people say it is printing money. I realize printing money is a metaphor for increasing the money supply, but why does cutting the interest rate increase the money supply? And how do they figure out exactly how much? Like, they'll say, the fed injected 41 billion dollars (whatever) into the money supply, something like that, but they'll relate that to the interest rate cut.|||There are three ways that the Fed changes the money supply. The first two- change in the reserve requirement and change in the discount rate- never used (the first) or don't matter (the second). The third is changing the fed funds TARGET rate- this is the one that you are talking about.
The FRB sets the fed funds target rate- but note that the actual rate is determined in the open market by lenders and borrowers.
To make the market rate converge to the target rate, the Fed buys and sells treasury securities. When the Fed buys- lets say $41 bil- T-bills from a bank- or individuals who eventually deposits the proceeds in a bank- the end result is that there is now an extra $41 bil in the banking system and part of the money supply. The sale of treasuries has the opposite effect.
To determine how much to buy, the Federal Open Markets Committee (FOMC) continuously buys and sells treasuries so that the actual fed funds rate converges to the target rate.
The previous poster errorneously stated that the Fed uses statistical techniques to determine the amount. This is not the case. The FOMC makes an initial guess and if it is wrong, it simply puts in another buy or sell order to influence the rate. This trading is done continuously to ensure that the actual and target rates are reasonably close.|||There are three ways to cut rates in US reserve system. The Fed can buy United States Treasury obligations and issue money in stead of the interest bearing obligation. Remember money is a non-interest bearing debt obligation of the government which can be used to pay taxes. When you buy Treasuries for money, the Fed is just changing one debt for another.
The second method is that the Fed can change resere requirements, which is to say, they can increase or decrease the mandatory amount of money required to support deposit operations. It is money that is unusable and must be held in either vault cash or reserves in proportion to deposits. Theoretically, it is rainy day money.
Third, the Fed can increase or decrease the discount rate.
Using money demand equations, the Fed estimates the supply of money required to hold the economy in equilibrium. These amounts are interest rate sensitive. They estimate the impact of a rate change on the demand for money. They break the equilibrium in the case of proactive policy and follow the equilibrium in reactive policy. 99% of Fed policy is a reaction to money demand and not proactive policy. Proactive policy usually fails and usually fails miserably. The real goal of the Fed is not to make mistakes. It does not appear that the Fed can make things better, but they can make things a whole lot worse.
So it is a statistical estimation problem. The mechanism depends upon what they are trying to do and how fast they want to do it. Target audience and timing are their questions.|||There are four ways that the money supply is affected:
1. Interest rates that make certain business projects feasible. The lower the rate the more business projects can be financed and make a profit.
2. The velocity of money. The money supply has a speed to it being used over and over again. The faster the speed the faster the velocity. Lower interest rates create a demand for money through borrowing for business projects.
3. Banks are required to hold back some of their assets instead of loaning them out. The lower the rate the more money they can loan out - to meet the demand of borrowing - caused by lower interest rates.
4. When National Banks of various countries lower their interest rates they devalue their money - which makes it cheaper for other countries to buy our goods rather than from other countries with a higher interest rate. It also makes those countries that loaned us money take a loss.|||Homer J Simpson nailed your answer|||Cause the more money the Fed Reserve prints out, means more inflation.
The FRB sets the fed funds target rate- but note that the actual rate is determined in the open market by lenders and borrowers.
To make the market rate converge to the target rate, the Fed buys and sells treasury securities. When the Fed buys- lets say $41 bil- T-bills from a bank- or individuals who eventually deposits the proceeds in a bank- the end result is that there is now an extra $41 bil in the banking system and part of the money supply. The sale of treasuries has the opposite effect.
To determine how much to buy, the Federal Open Markets Committee (FOMC) continuously buys and sells treasuries so that the actual fed funds rate converges to the target rate.
The previous poster errorneously stated that the Fed uses statistical techniques to determine the amount. This is not the case. The FOMC makes an initial guess and if it is wrong, it simply puts in another buy or sell order to influence the rate. This trading is done continuously to ensure that the actual and target rates are reasonably close.|||There are three ways to cut rates in US reserve system. The Fed can buy United States Treasury obligations and issue money in stead of the interest bearing obligation. Remember money is a non-interest bearing debt obligation of the government which can be used to pay taxes. When you buy Treasuries for money, the Fed is just changing one debt for another.
The second method is that the Fed can change resere requirements, which is to say, they can increase or decrease the mandatory amount of money required to support deposit operations. It is money that is unusable and must be held in either vault cash or reserves in proportion to deposits. Theoretically, it is rainy day money.
Third, the Fed can increase or decrease the discount rate.
Using money demand equations, the Fed estimates the supply of money required to hold the economy in equilibrium. These amounts are interest rate sensitive. They estimate the impact of a rate change on the demand for money. They break the equilibrium in the case of proactive policy and follow the equilibrium in reactive policy. 99% of Fed policy is a reaction to money demand and not proactive policy. Proactive policy usually fails and usually fails miserably. The real goal of the Fed is not to make mistakes. It does not appear that the Fed can make things better, but they can make things a whole lot worse.
So it is a statistical estimation problem. The mechanism depends upon what they are trying to do and how fast they want to do it. Target audience and timing are their questions.|||There are four ways that the money supply is affected:
1. Interest rates that make certain business projects feasible. The lower the rate the more business projects can be financed and make a profit.
2. The velocity of money. The money supply has a speed to it being used over and over again. The faster the speed the faster the velocity. Lower interest rates create a demand for money through borrowing for business projects.
3. Banks are required to hold back some of their assets instead of loaning them out. The lower the rate the more money they can loan out - to meet the demand of borrowing - caused by lower interest rates.
4. When National Banks of various countries lower their interest rates they devalue their money - which makes it cheaper for other countries to buy our goods rather than from other countries with a higher interest rate. It also makes those countries that loaned us money take a loss.|||Homer J Simpson nailed your answer|||Cause the more money the Fed Reserve prints out, means more inflation.
What is a good auto loan interest rate?
I'm planning to buy a 2005 Nissan Altima for $8500. The dealership is still running through their banks to find out what my payments would be and stuff. I'm also checking with my own banks, and my parent's credit union to see what I can get. I really have no idea what I should be looking for in an interest rate. I don't know what's too high, or what is ideal. Of course I'm going to go with whatever is lowest out of the banks, but I want to know what to expect before I sign those papers. What should I expect for an interest rate? I owe almost $3000 on my credit cards. I have a $5000 student loan that I haven't started paying yet (because I'm not done with school) and my credit score is almost 650. What's a good rate and what should I expect?|||i think you are better off getting a personal loan rather than an auto loan as the interest rates are usually lower. Get all information about it at: http://www.credit-card-forums.com/thread鈥?/a>|||Auto Loan Guide: http://autoloans.autoloanassistance.info
|||Look for a less expensive car and pay off debt before you get into trouible.
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|||Look for a less expensive car and pay off debt before you get into trouible.
What is the interest rate on a refinance?
I think I would like to take advantage of the low interest rates...Should I do it now or wait a couple of months. What is the current rate on a 30 year fixed?|||Mortgage rates vary as to location, borrower(credit rating), and property. Yes, today's rates are as good as it gets, unless of course something changes to make them better or worse.
I suggest that today's rates near 5%, as low as 4.5% in Augusta Ga. where values have increase 5.8% in the last year, are pretty darn good. So go ahead, and refinance knowing that you probably won't miss anything much lower in 6 months unless we have a much worse slide in the overall world or national economic market.|||The lowest interest rate applies to those with the best credit which is around 5% give or take some 10ths...why wait its not going 2 get much lower and soon as the economy shows some growth the fed is going to raise the rate again cause basically that's the only card they hold as far has a financial entity...their not a government agency but they control the monetary rates in America. It kind seems wrong 2 me that a commission of banks dictate how our money is controlled
I suggest that today's rates near 5%, as low as 4.5% in Augusta Ga. where values have increase 5.8% in the last year, are pretty darn good. So go ahead, and refinance knowing that you probably won't miss anything much lower in 6 months unless we have a much worse slide in the overall world or national economic market.|||The lowest interest rate applies to those with the best credit which is around 5% give or take some 10ths...why wait its not going 2 get much lower and soon as the economy shows some growth the fed is going to raise the rate again cause basically that's the only card they hold as far has a financial entity...their not a government agency but they control the monetary rates in America. It kind seems wrong 2 me that a commission of banks dictate how our money is controlled
Whats the difference between the interest rate and the APR in a mortgage loan. How is ARP calculcated?
Take for example a 30-yr conforming loan at 5.5 interest rate and an APR of 5.98. What does that mean and what are the factors involved in determining APR.|||The APR calculation is compicated and there is a formula for it that I would challenge anyone in the mortgage business to really use correctly. However, a basic understanding of the things that impact the APR is helpful in insuring that you are comparing apples to apples in choosing a loan.
The APR factors in the pre-paid finance charges of a loan along with the note rate to arrive at the yearly cost of borrowing. Yes, it assumes that you will keep the loan for whatever the original term is so if you payoff a loan in 5 years vs. the term assumed in the APR calculation, the APR over the 5 years will be higher than what you thought originally. Basically, the less time you plan to be in a loan, the lower you will want the costs to be. Otherwise, you are paying for interest rate savings that you will never see.
First, lets assume that there is no private mortgage insurance involved. If the note rate was 5.5 and the APR was 5.98 on a 100K loan, your pre-paid finance charges would be about 5K. Essentially, it is costing you 5% to buy the rate down.
If PMI is involved, it also affects the APR calculation because it is assumed that you will have the PMI for about 10 years and, indeed, it increases the cost of borrowing. Lets say you are doing a 90% purchase, the PMI is probably a factor of 0.375 or so. Using the same example from above, we would subtract the PMI factor from the APR. Now, our pre-paid finance charges are much less of a factor as they are about $1200 so a majority of the difference between the note rate and the APR is explained by the presence of PMI.
From our first example, lets compare the 5.5% to a 6% loan with no (or minimal) pre-paid finance charges to see which is a better deal. At 5.5%, our payments would be roughly $568. At 6%, they would be roughly $600. So, why would you spend 5K upfront to save $32 a month? It would take 13 years before you actually started to save money. Less if you discount the $32 monthly savings. In fact, if you discount the savings at an average rate of 3%, it would take about 16.5 years to break even on the basis of net present value.
I hope that something that I have said will help to clarify the difference between the note rate and APR.
If you have any follow up questions, you can email me through the link in my profile.|||No, I don't want your example, I'll use my own.
The APR is the "effective" interest rate on the loan, considering all "prepaid items".
Look at it this way. Say you're borrowing 100,000 for one year, and you are going to pay 12 per cent with no up front fees. At the end of the year, you repay 112,000, interest is 12 per cent, APR is 12 per cent.
Now, say you could borrow at 10 per cent, but the prepaid charges are 3,000. According to the Truth in Lending, you're getting 97,000, and you'll repay 110,000 at the end of the year. Interest rate is still ten percent, but the APR is 13.5 or so, because you're paying back 13,000 more than you actually received.
If that doesn't make sense, email me.|||Another answer is this: Say you borrow $100,000 at 5.5% for the loan for 30 years. But if you also have to pay $3,500 in fees to obtain that loan. So assume you keep the loan for 30 years you are paying the interest plus the fees which ends up being more like 5.98%. APR (annual percentage rate) is your "effective" rate with all the fees included assuming you kept the loan for the entire term.|||APR includes hidden costs and transaction fees so it's a better comparison tool. Check out source for detailed explanation and similar example.
The APR factors in the pre-paid finance charges of a loan along with the note rate to arrive at the yearly cost of borrowing. Yes, it assumes that you will keep the loan for whatever the original term is so if you payoff a loan in 5 years vs. the term assumed in the APR calculation, the APR over the 5 years will be higher than what you thought originally. Basically, the less time you plan to be in a loan, the lower you will want the costs to be. Otherwise, you are paying for interest rate savings that you will never see.
First, lets assume that there is no private mortgage insurance involved. If the note rate was 5.5 and the APR was 5.98 on a 100K loan, your pre-paid finance charges would be about 5K. Essentially, it is costing you 5% to buy the rate down.
If PMI is involved, it also affects the APR calculation because it is assumed that you will have the PMI for about 10 years and, indeed, it increases the cost of borrowing. Lets say you are doing a 90% purchase, the PMI is probably a factor of 0.375 or so. Using the same example from above, we would subtract the PMI factor from the APR. Now, our pre-paid finance charges are much less of a factor as they are about $1200 so a majority of the difference between the note rate and the APR is explained by the presence of PMI.
From our first example, lets compare the 5.5% to a 6% loan with no (or minimal) pre-paid finance charges to see which is a better deal. At 5.5%, our payments would be roughly $568. At 6%, they would be roughly $600. So, why would you spend 5K upfront to save $32 a month? It would take 13 years before you actually started to save money. Less if you discount the $32 monthly savings. In fact, if you discount the savings at an average rate of 3%, it would take about 16.5 years to break even on the basis of net present value.
I hope that something that I have said will help to clarify the difference between the note rate and APR.
If you have any follow up questions, you can email me through the link in my profile.|||No, I don't want your example, I'll use my own.
The APR is the "effective" interest rate on the loan, considering all "prepaid items".
Look at it this way. Say you're borrowing 100,000 for one year, and you are going to pay 12 per cent with no up front fees. At the end of the year, you repay 112,000, interest is 12 per cent, APR is 12 per cent.
Now, say you could borrow at 10 per cent, but the prepaid charges are 3,000. According to the Truth in Lending, you're getting 97,000, and you'll repay 110,000 at the end of the year. Interest rate is still ten percent, but the APR is 13.5 or so, because you're paying back 13,000 more than you actually received.
If that doesn't make sense, email me.|||Another answer is this: Say you borrow $100,000 at 5.5% for the loan for 30 years. But if you also have to pay $3,500 in fees to obtain that loan. So assume you keep the loan for 30 years you are paying the interest plus the fees which ends up being more like 5.98%. APR (annual percentage rate) is your "effective" rate with all the fees included assuming you kept the loan for the entire term.|||APR includes hidden costs and transaction fees so it's a better comparison tool. Check out source for detailed explanation and similar example.
How should I alter my home loan given the current interest rate cut?
I would appreciate some advice as to how I should alter my home loan. I am currently struggling with the home loan payments I am currently on.
I have a mortgage of $ 658000 at an interest rate of 7%, variable rate.
Should I be changing part of the loan to fixed rate given the current interest rate cut scenario ?|||You'll have to consider the cash money needed to close on the re-fi. .... how ever much that is ? a couple thousand? Not sure.|||Change it all to 3.75% for 30yrs or 4% if you miss the lower RATE.
DO IT NOW A.S.A.P.
I have a mortgage of $ 658000 at an interest rate of 7%, variable rate.
Should I be changing part of the loan to fixed rate given the current interest rate cut scenario ?|||You'll have to consider the cash money needed to close on the re-fi. .... how ever much that is ? a couple thousand? Not sure.|||Change it all to 3.75% for 30yrs or 4% if you miss the lower RATE.
DO IT NOW A.S.A.P.
What factors cause the real interest rate to rise or fall?
What factors cause the real interest rate to rise or fall and in which direction?
Please keep it brief and simple. Thanks.|||It all has to do with risk in the current economy.
Please keep it brief and simple. Thanks.|||It all has to do with risk in the current economy.
Why is the interest rate on a loan different from the APR?
When loans are advertised, they always have 2 rates- a regular rate, and an "annual percentage rate" which is always higher.
Seems to me that the APR should be lower, or the same as, the offered interest rate. Anyone out there interested in taking a stab at a simple explanation?|||Annual Percentage Rate (APR) is a way to compare the costs of a loan. Although it鈥檚 not perfect, it gives you a nice standard for comparing the percentage costs on different loans. This page covers the basics of APR, and how you can calculate it.
http://banking.about.com/od/loans/a/calc鈥?/a>|||I have seen APR (annual percentage rate) and APY (annual percentage yield). APY shows compounding that is why it is higher but I have never seen loan rates advertised in pairs.
I'm not loan officer but the APR may be higher because it is including closing fees/taxes/miscl costs.
Hope this helps.|||I had the same problem last year. Play it safe %26amp; click on the first and eighth links here; www.loanssource.tk
Seems to me that the APR should be lower, or the same as, the offered interest rate. Anyone out there interested in taking a stab at a simple explanation?|||Annual Percentage Rate (APR) is a way to compare the costs of a loan. Although it鈥檚 not perfect, it gives you a nice standard for comparing the percentage costs on different loans. This page covers the basics of APR, and how you can calculate it.
http://banking.about.com/od/loans/a/calc鈥?/a>|||I have seen APR (annual percentage rate) and APY (annual percentage yield). APY shows compounding that is why it is higher but I have never seen loan rates advertised in pairs.
I'm not loan officer but the APR may be higher because it is including closing fees/taxes/miscl costs.
Hope this helps.|||I had the same problem last year. Play it safe %26amp; click on the first and eighth links here; www.loanssource.tk
What is the interest rate for income property over five units in California?
I want to buy an apartment with 6 units but I am wondering what I will be looking at as far as the interest rate. I am looking at both fixed and adjustable. I need to keep the rate as low as possible. I have great credit, good income, and also own four single family properties that less than half the value is owed. I want to put a down payment of 10-15%. Any and all help and advice would be greatly appreciated! Thank you|||Rates for 5+ units are hovering around 6.25 percent for loans over 500K. Expect rates around 6.5 to 6.75 for loans under 500k
Why is the interest rate referred to as the price of money?
1. Why is the interest rate referred to as the price of money?
2. When government change interest rates through monetary policy in times of boom and high inflation ?
3. Which direction do they want interest rates to go?|||1. If you wanted an extra 100k, you'd have to 'get' it from someone else. Hence you're 'renting' their 100k from them, for your use. Of course you have to pay them back, plus a fee (interest) for them letting you use it.
2. The reason bread is a $1, is because there's a certain amount of money TODAY, with a certain amount of PEOPLE today. If interest rates go DOWN, and people think "gee I don't have $500 in the bank, I borrowed money, now I have $2000 to spend today, - and make 'me' of the future pay it back"... The more things are bought today by 'stealing' away from the future. Lower interest rates means more spending today, which can lead to inflation. This all works backwards if interest rates go up.
"Savers" want interest rates to go up. "Spenders" want interest rates to go down.|||Too many questions to answer all at once.
I'll respond to the first one.
The price of BORROWING money is the interest rate you will pay on a fixed amount.|||1. When you borrow money the institution that you borrowed it from has to make a profit. That profit is called interest.
2. Governments do not change interest rates. Banks change interest rates. Whatever teacher, instructor or professor asked this question ask them to tell you who owns the Federal Reserve? If they tell you the government, tell them I said they shouldn't be teaching.
3. Interest rates are used as a political tool. For example, if the banking institutions are friendly towards a country to further their own agenda, they give them a low or favorable interest rate on their loans.|||If you are borrowing money, the interest rate is a cost to you! Thus called the price of money.
What is the government is trying to do?
The Federal Reserve in a time when it thinks inflation is about to exceed 2.50 to 3.00% raises the rate that it controls to prevent or control inflation above this level.
For a time rates across the yield curve all increase. Then you reach a point where the yield curve is flat or inverted.
This is when the Fed may have to pause any increases in short term rates so as not to send the economy into recession.
This where we are now!
The Fed does not control long-term rates( 7 years or longer), the market does! So in effect the Fed by raising short-term rates will eventually stop long-term rates from rising and eventually long-term rates will decline.
If the market is confident that the Fed will do what is necessary to stop or control inflation then Long-term rates will Not increase very much. The market is confident now! Remember the market are the people who own or continue to buy longer-term bonds. Their money is at risk. So their opinion is the most important.
We are in a Flat Yield curve Now partly because the market believes inflation is contained and the Fed will continue to do what is necessary. If the market loses this confidence in the Fed then longer-Term bond yields will explode higher. This will NOT be the case because the Fed learned the hard way in the late 1960's %26amp; 1970's that runaway inflation is the most destructive for our economy, economic system and our way of life!
The mistakes of the mid 1960's %26amp; 1970's must Not be repeated. Any politician that tries to repeat the policies of the mid 1960's %26amp; 1970's should be VOTED Down ASAP or NOT voted into office!!!!!!!! Go back and READ the History so Not as to repeat History! That goes for world affairs as well, go back and read World History of the 1930's.
The Fed will Fight inflation at all costs!!!!!!!!
By the way check out SAFE MONEY Places to put your money: http://www.jdsannuities.com|||interest rate (of using money) depends on many factors:
1-time.2- risk.3-economical situation (how match government need money)...................|||1. Interest is called the price of money because it is the price you pay to borrow it.
2. Interest rates are changed to keep the economy flowing. When interest is high, people save money because they are earning more interest. When interest is low they spend more because they can borrow more and pay less for it.
3. This question isn't exactly answerable... Interest rates are the controls to keep the economy moving, it is not the needle on a dial they want to keep in a specific area.
Hope this is helpful.
2. When government change interest rates through monetary policy in times of boom and high inflation ?
3. Which direction do they want interest rates to go?|||1. If you wanted an extra 100k, you'd have to 'get' it from someone else. Hence you're 'renting' their 100k from them, for your use. Of course you have to pay them back, plus a fee (interest) for them letting you use it.
2. The reason bread is a $1, is because there's a certain amount of money TODAY, with a certain amount of PEOPLE today. If interest rates go DOWN, and people think "gee I don't have $500 in the bank, I borrowed money, now I have $2000 to spend today, - and make 'me' of the future pay it back"... The more things are bought today by 'stealing' away from the future. Lower interest rates means more spending today, which can lead to inflation. This all works backwards if interest rates go up.
"Savers" want interest rates to go up. "Spenders" want interest rates to go down.|||Too many questions to answer all at once.
I'll respond to the first one.
The price of BORROWING money is the interest rate you will pay on a fixed amount.|||1. When you borrow money the institution that you borrowed it from has to make a profit. That profit is called interest.
2. Governments do not change interest rates. Banks change interest rates. Whatever teacher, instructor or professor asked this question ask them to tell you who owns the Federal Reserve? If they tell you the government, tell them I said they shouldn't be teaching.
3. Interest rates are used as a political tool. For example, if the banking institutions are friendly towards a country to further their own agenda, they give them a low or favorable interest rate on their loans.|||If you are borrowing money, the interest rate is a cost to you! Thus called the price of money.
What is the government is trying to do?
The Federal Reserve in a time when it thinks inflation is about to exceed 2.50 to 3.00% raises the rate that it controls to prevent or control inflation above this level.
For a time rates across the yield curve all increase. Then you reach a point where the yield curve is flat or inverted.
This is when the Fed may have to pause any increases in short term rates so as not to send the economy into recession.
This where we are now!
The Fed does not control long-term rates( 7 years or longer), the market does! So in effect the Fed by raising short-term rates will eventually stop long-term rates from rising and eventually long-term rates will decline.
If the market is confident that the Fed will do what is necessary to stop or control inflation then Long-term rates will Not increase very much. The market is confident now! Remember the market are the people who own or continue to buy longer-term bonds. Their money is at risk. So their opinion is the most important.
We are in a Flat Yield curve Now partly because the market believes inflation is contained and the Fed will continue to do what is necessary. If the market loses this confidence in the Fed then longer-Term bond yields will explode higher. This will NOT be the case because the Fed learned the hard way in the late 1960's %26amp; 1970's that runaway inflation is the most destructive for our economy, economic system and our way of life!
The mistakes of the mid 1960's %26amp; 1970's must Not be repeated. Any politician that tries to repeat the policies of the mid 1960's %26amp; 1970's should be VOTED Down ASAP or NOT voted into office!!!!!!!! Go back and READ the History so Not as to repeat History! That goes for world affairs as well, go back and read World History of the 1930's.
The Fed will Fight inflation at all costs!!!!!!!!
By the way check out SAFE MONEY Places to put your money: http://www.jdsannuities.com|||interest rate (of using money) depends on many factors:
1-time.2- risk.3-economical situation (how match government need money)...................|||1. Interest is called the price of money because it is the price you pay to borrow it.
2. Interest rates are changed to keep the economy flowing. When interest is high, people save money because they are earning more interest. When interest is low they spend more because they can borrow more and pay less for it.
3. This question isn't exactly answerable... Interest rates are the controls to keep the economy moving, it is not the needle on a dial they want to keep in a specific area.
Hope this is helpful.
How much higher is the interest rate for a rental property mortgage?
I'm looking into purchasing a property to rent out to tenants... I know the interest rate will be higher on a rental, but how much higher? Also, is the insurance cost higher or lower than regular homeowners insurance?|||The rate will depend upon your credit worthiness, income, debt to income ratio, usually it's about 1% higher for most loans I complete. And insurance will be higher and initially after the closing until you find a tenant it will be very high since it won't be occupied yet and will have to be insured as vacant.|||On the insurance ... you will want to get a commercial policy, which will cover the building even when not occupied. It will also provide you with a higher level of liability coverage, and coverage for lost income if the house becomes unihabitable due to fire or flood, etc.
My cost for a commercial policy, when I converted my primary residence to a rental, increased 50%. It's pricey, but it's also a write-off on taxes.
My cost for a commercial policy, when I converted my primary residence to a rental, increased 50%. It's pricey, but it's also a write-off on taxes.
How do I calculate the interest rate I earned on a 401K account?
I have records of my contribution and balance at the end of each month. From this I can see the total amount of interest earned each month. How do I find the rate though?|||The easiest way is to ...
lmt=last month total
tmt=this month total
in=amount you added to the 401K
rate=(tmt-lmt-in)/lmt
this will get you the rate for the month, if you want an annual rate multiply the above by 12.
Keep track of this on a month to month basis and soon you can keep a rolling average of your gains.
///|||You should be getting a statement from the trustee telling you this information.
ask for it.|||To express it on percentage, multiply by 100 what you got from SWH's equation.
lmt=last month total
tmt=this month total
in=amount you added to the 401K
rate=(tmt-lmt-in)/lmt
this will get you the rate for the month, if you want an annual rate multiply the above by 12.
Keep track of this on a month to month basis and soon you can keep a rolling average of your gains.
///|||You should be getting a statement from the trustee telling you this information.
ask for it.|||To express it on percentage, multiply by 100 what you got from SWH's equation.
Interest rate?
Do you think the Feds should increase, decrease or leave the interest rates the same?|||The interest rates will begin to decrease in the future.
Interest Rate?
The formula for computing the amount A of an investment of principal P invested at interest rate r for 1 year and compounded semiannually is A = P(1 + r/2)^2. Approximately what interest rate is necessary for $1,000 to grow to $1,095, in 1 year if the interest is compounded semiannually?
___________________________________
I already know that:
1095 = 1000(1 + r/2)^2
a)WHAT IS r?
b)WHAT ARE THE OTHER STEPS IN SOLVING?|||This is simple algebra. You are given "1095 = 1000(1 + r/2)^2" and have to solve for r. I won't give you the solution, since it's obviously a homework problem, but as a hint all you need is a calculator that allows you to take square roots.
___________________________________
I already know that:
1095 = 1000(1 + r/2)^2
a)WHAT IS r?
b)WHAT ARE THE OTHER STEPS IN SOLVING?|||This is simple algebra. You are given "1095 = 1000(1 + r/2)^2" and have to solve for r. I won't give you the solution, since it's obviously a homework problem, but as a hint all you need is a calculator that allows you to take square roots.
Interest rate.?
A fall in the domestic interest rate is likely to cause:
A. An increase of the level of government purchases;
B. A fall in the level of planned investment expenditure;
C. A fall in the foreign exchange value of the currency;
D. A fall in the level of aggregate demand;
E. None of the above.|||E. None of the above.
All the best :)|||How about C? e.g: fall in domestic interest rate would lead most of investors to shift their investments away from the country, and therefore the demand for the currency would decrease?
|||d|||Only A|||I think E is the most appropriate answer.
A. An increase of the level of government purchases;
B. A fall in the level of planned investment expenditure;
C. A fall in the foreign exchange value of the currency;
D. A fall in the level of aggregate demand;
E. None of the above.|||E. None of the above.
All the best :)|||How about C? e.g: fall in domestic interest rate would lead most of investors to shift their investments away from the country, and therefore the demand for the currency would decrease?
Report Abuse
|||d|||Only A|||I think E is the most appropriate answer.
Interest rate........?
Norton borrowed $1800 form the bank. If he repaid the loan with $3966.76 at the end of 16 years, what interest rate did the bank charge if it was compounded semiannually?
Please explain this to me...I am confused. Thanks|||Let me try to explain.
Imagine, the interest rate is 'a'
Every six months the interest is compounded.
So after the first six months, the principle 'P' becomes
P+ (P*a)/(2*100)
( /2 is because it is interest for half year. )
= P * (200+a) / 200
On completion of the next six months, the principle becomes
P * (200+a) / 200 * (200+a) / 200
So, for every six months, it get multiplied by the factor (200+a) / 200
Let us assume (200+a) / 200 = x
For 16 years or after 32 half years, the principle becomes
P * [(200+a) / 200]^32
Final amount = P * x^32
Putting the known figures, we get
3966.76 = 1800 * x^32
So, x^32 = 3966.76 / 1800 = 2.20376
Hence x = 1.025
ie. (200+a) / 200 = 1.025
There for, The interest rate a = ( 1.025 * 200 ) - 200 = 5
So, Interest rate, a = 5% annually, compounded half yearly.
or
Interest rate is 2.5% half yearly, compounded
You can verify this
1800* ( 1.025 )^32 = 1800 * 2.20376 = 3966.76
Hence proved|||4.9% anually so his interest rate was 4.9/2 %
Please explain this to me...I am confused. Thanks|||Let me try to explain.
Imagine, the interest rate is 'a'
Every six months the interest is compounded.
So after the first six months, the principle 'P' becomes
P+ (P*a)/(2*100)
( /2 is because it is interest for half year. )
= P * (200+a) / 200
On completion of the next six months, the principle becomes
P * (200+a) / 200 * (200+a) / 200
So, for every six months, it get multiplied by the factor (200+a) / 200
Let us assume (200+a) / 200 = x
For 16 years or after 32 half years, the principle becomes
P * [(200+a) / 200]^32
Final amount = P * x^32
Putting the known figures, we get
3966.76 = 1800 * x^32
So, x^32 = 3966.76 / 1800 = 2.20376
Hence x = 1.025
ie. (200+a) / 200 = 1.025
There for, The interest rate a = ( 1.025 * 200 ) - 200 = 5
So, Interest rate, a = 5% annually, compounded half yearly.
or
Interest rate is 2.5% half yearly, compounded
You can verify this
1800* ( 1.025 )^32 = 1800 * 2.20376 = 3966.76
Hence proved|||4.9% anually so his interest rate was 4.9/2 %
Thursday, December 15, 2011
Interest Rate?
Elaine was chargd $195 interest for 1 month on a $1000 credit card balance. What was the monthly interest rate?|||195 / 1 000 = 0.195 = 19.5%|||19.5% wow that is horrendous
Interest rate...?
find the interest rate r for an investment of $1200 that earned $66 in interest for one year|||i=prt
t=1
p=1200
i=66
66=1200*r*1
66=1200r
r=66/1200=.055=5.5%|||x = 66 x 100% ; x =6600/1200; x = 5,5%|||s=prt
t=1
p=1200
s=66
66=1200*r*1
66=1200r
r=66/1200=.055=5.5%|||5.5%.
1200x=66
66/1200|||Remember the formula- Principle * (interest)^(rate * time)
1200(1 + r)^(1) = 1266
1 + r = 1266/1200
r = 66/1200
t=1
p=1200
i=66
66=1200*r*1
66=1200r
r=66/1200=.055=5.5%|||x = 66 x 100% ; x =6600/1200; x = 5,5%|||s=prt
t=1
p=1200
s=66
66=1200*r*1
66=1200r
r=66/1200=.055=5.5%|||5.5%.
1200x=66
66/1200|||Remember the formula- Principle * (interest)^(rate * time)
1200(1 + r)^(1) = 1266
1 + r = 1266/1200
r = 66/1200
Interest rate?
principle of a student loan is 25.000 usd. The interest rate is 8 percent p.a. What will be the outstanding balance after 5 years if interest rate is compounded
a)annually
b)semi-annually
c)monthly
d)daily(365)
e)continously|||Okay, you've typed in your homework question. Now, where do you need *help*? Doing the entire problem for you would be cheating.
Your textbook and class notes contain equations for handling these cases. The first four use the equation for discrete interest, with 1, 2, 12, and 365 periods in the year, respectively. The interest rate per period is ... well, you should be able to get that part.
"Continuously" uses the equation with epsilon (that 2.718... number) raised to a power.
Does that get you in the direction of a solution?
a)annually
b)semi-annually
c)monthly
d)daily(365)
e)continously|||Okay, you've typed in your homework question. Now, where do you need *help*? Doing the entire problem for you would be cheating.
Your textbook and class notes contain equations for handling these cases. The first four use the equation for discrete interest, with 1, 2, 12, and 365 periods in the year, respectively. The interest rate per period is ... well, you should be able to get that part.
"Continuously" uses the equation with epsilon (that 2.718... number) raised to a power.
Does that get you in the direction of a solution?
Interest rate?
A Superstore that sells consumer electronics (Foochureshop) advertises a laptop for $799.99. With taxes (14%) it totals $911.99. They also advertise 24 payments, no interest. But of course written in supersmall font; "$99.95 Admin fee applies".
My question is, for this product, what would the interset rate work out to be, in lieu of the admin fee, to total the same $99.95 over the course of 24 months?|||It's about 10.5%...not exactly but close
My question is, for this product, what would the interset rate work out to be, in lieu of the admin fee, to total the same $99.95 over the course of 24 months?|||It's about 10.5%...not exactly but close
Interest rate?
at what interest rate should an investor invest her money compounded semiannually so that her investment is tripled in 9 years?|||15% p.a. compound interest will give you desired result.
there is excell sheet which give you instant answer for each pecentage.|||There are lot's of great options.
If you don't know any successful business to invest in then the best and safest investment is putting your $$$ into a high-yield account overseas at 12% per annum compounded annually.
Best of luck!
there is excell sheet which give you instant answer for each pecentage.|||There are lot's of great options.
If you don't know any successful business to invest in then the best and safest investment is putting your $$$ into a high-yield account overseas at 12% per annum compounded annually.
Best of luck!
Interest Rate?
The formula for computing the amount A of an investment of principal P invested at interest rate r for 1 year and compounded semiannually is A = P(1 + r/2)^2. Approximately what interest rate is necessary for $1,000 to grow to $1,095, in 1 year if the interest is compounded semiannually?|||A = 1095 (final amount)
P = 1000 (starting amount)
and everything else is the same.
just solve algebraically.
P = 1000 (starting amount)
and everything else is the same.
just solve algebraically.
Interest rate?
Joseph bought a stereo system on his credit card on May 14th for 2759.43 his due date is May 27th. The interest rate is 19% he does NOT make any payments. How much interest would he be charged until his due date?|||Just use the standard formula:
Interest = principal x Rate x time
(I = PRT)
Just plug in the numbers/values where they appear in the formula and solve for the Interest rate amount needed.
Good Luck!|||glad to be of help...I'm a college math tutor...
|||Use this formula:
tn=ar^n-1|||you said barf on my jonas brother question so barf on yours
Interest = principal x Rate x time
(I = PRT)
Just plug in the numbers/values where they appear in the formula and solve for the Interest rate amount needed.
Good Luck!|||glad to be of help...I'm a college math tutor...
Report Abuse
|||Use this formula:
tn=ar^n-1|||you said barf on my jonas brother question so barf on yours
Interest rate?
If interest is compounded continuously and the interest rate is tripled, what effect will this have on the time required for an investment to double?|||The equation for continuous compounding is e^ rt. So the value of an investment can be found out by making this equation i.e.
P(e^ rt)= ? where P is the value of investment and ? is the value the investment will become.
For example $100 at a rate of 10% after one year under continuous compounding will be worth Rs. 110.516 approximately
As you are asking it to be doubled it means we have to make the equation like this
P(e^ rt)= 2P ( Future value is not denoted by P)
So it means
$100(e^rt)= $200, as we have assumed the rate of 10% and time one year therefore
$100(2.718^0.1*t)= $200
simplifying (dividing both sides by $100
2.718^0.1*1 = 2
As rate and time are in the exponents therefore to solve it you have to take the logs
rt *log of 2.718 = log of 2
on further simplifying
time = log of 2 / y (log of 2.718 * rate)------------(a)
Now putting the values
log of 2 = 0.693147181
log of 2.718 = 0.999896316
Rate = 10%
time = 6.932 years approximately
As you are talking about tripling the rate it means in equation (a) you will have to multiply the rate by 3 so it will become
time = log of 2 / by (log of 2.718 * 3*rate)
so denominator is increased by three times so your answer of 6.932 years will reduce by 3 times to 2.31 years|||by tripling the interest rate, the time to double will be cut to 1/3 the time.
Example: interest rate of 5%: Years = ln2/.05 = 13.86 years Example: interest rate of 15%: Years = ln2/.15 = 4.62 years
Continuopusly compounded formula-
FV = P*e^(Yr) where FV = future value, P = principal, Y = years, and r = rate.|||since it is compounded continuously u have to use p(t) = Pe^rt
e is inverse of ln( natural log).
2p=Pe^3t
divide by p, they cancel
u have
2 = e^3t
use ln
ln2 = lne^3t
ln and e cancel.
u have
ln2= 3t
divide by 3
(ln2)/3 = time
use a calulator
t = 0.23104906018664842
or t = .23 years of
23/1000 = x/12
= 3 months to double
P(e^ rt)= ? where P is the value of investment and ? is the value the investment will become.
For example $100 at a rate of 10% after one year under continuous compounding will be worth Rs. 110.516 approximately
As you are asking it to be doubled it means we have to make the equation like this
P(e^ rt)= 2P ( Future value is not denoted by P)
So it means
$100(e^rt)= $200, as we have assumed the rate of 10% and time one year therefore
$100(2.718^0.1*t)= $200
simplifying (dividing both sides by $100
2.718^0.1*1 = 2
As rate and time are in the exponents therefore to solve it you have to take the logs
rt *log of 2.718 = log of 2
on further simplifying
time = log of 2 / y (log of 2.718 * rate)------------(a)
Now putting the values
log of 2 = 0.693147181
log of 2.718 = 0.999896316
Rate = 10%
time = 6.932 years approximately
As you are talking about tripling the rate it means in equation (a) you will have to multiply the rate by 3 so it will become
time = log of 2 / by (log of 2.718 * 3*rate)
so denominator is increased by three times so your answer of 6.932 years will reduce by 3 times to 2.31 years|||by tripling the interest rate, the time to double will be cut to 1/3 the time.
Example: interest rate of 5%: Years = ln2/.05 = 13.86 years Example: interest rate of 15%: Years = ln2/.15 = 4.62 years
Continuopusly compounded formula-
FV = P*e^(Yr) where FV = future value, P = principal, Y = years, and r = rate.|||since it is compounded continuously u have to use p(t) = Pe^rt
e is inverse of ln( natural log).
2p=Pe^3t
divide by p, they cancel
u have
2 = e^3t
use ln
ln2 = lne^3t
ln and e cancel.
u have
ln2= 3t
divide by 3
(ln2)/3 = time
use a calulator
t = 0.23104906018664842
or t = .23 years of
23/1000 = x/12
= 3 months to double
Interest rate?
Ms. Jordan has been given a loan of $2,500 for 1 year. If
the interest charged is $275, what is the interest rate on the loan?|||275/2500 = 11%
the interest charged is $275, what is the interest rate on the loan?|||275/2500 = 11%
Interest Rate?
A bank credits interest on deposits monthly at rate 0.5% per month. What is the nominal
interest rate (per annum) for interest compounded monthly? Find the corresponding
annual effective rate of interest.|||Do your own homework!
interest rate (per annum) for interest compounded monthly? Find the corresponding
annual effective rate of interest.|||Do your own homework!
Interest rate?
suppose you invest 5,000 dollars and would like your investment to grow to 10,000 in eight years. What interest rate, compounded weekley, would you have to earn in order for this to happen?
Please show how you did the problem|||You wish to multiply your money by 2 in 8 years or 416 weeks.
For annual compounding, the percentage interest rate per year is i where (1+i/100)^8 = 2, or i = 100*(2^(1/8)-1) = 9.050773%
For weekly compounding the percentage interest rate per week is j where (1+j/100)^416 = 2, or j = 100*(2^(1/416)-1). This is a very small percentage rate (0.166761%) because it is weekly. To compare it with the annual figure, multiply it by 52, giving 8.671562%.|||if the interest rate is i per week, then after week one you will have
5000(1+i)
week 2: 5000(1+i)(1+i)
week 3: 5000(1+i)^3
week 159: 5000(1+i)^159
and after 8 years (week 416)
5000(1+i)^416
So we want:
5000(1+i)^416 = 10,000
(1+i)^416 = 2
(1+i) = 2^(1/416)
1+i = 1.0016676
i = 0.0016676
Or 0.16676% per week
To work out the equivalent APR, compound this up 52 times:
1.0016676^52 = 1.090507
So to double your money in 8 years you need an APR of 9.05%
Note: 8 years isn't exactly 416= 8*52 weeks, so the actually weekly interest rate required would be slightly lower
Please show how you did the problem|||You wish to multiply your money by 2 in 8 years or 416 weeks.
For annual compounding, the percentage interest rate per year is i where (1+i/100)^8 = 2, or i = 100*(2^(1/8)-1) = 9.050773%
For weekly compounding the percentage interest rate per week is j where (1+j/100)^416 = 2, or j = 100*(2^(1/416)-1). This is a very small percentage rate (0.166761%) because it is weekly. To compare it with the annual figure, multiply it by 52, giving 8.671562%.|||if the interest rate is i per week, then after week one you will have
5000(1+i)
week 2: 5000(1+i)(1+i)
week 3: 5000(1+i)^3
week 159: 5000(1+i)^159
and after 8 years (week 416)
5000(1+i)^416
So we want:
5000(1+i)^416 = 10,000
(1+i)^416 = 2
(1+i) = 2^(1/416)
1+i = 1.0016676
i = 0.0016676
Or 0.16676% per week
To work out the equivalent APR, compound this up 52 times:
1.0016676^52 = 1.090507
So to double your money in 8 years you need an APR of 9.05%
Note: 8 years isn't exactly 416= 8*52 weeks, so the actually weekly interest rate required would be slightly lower
Can you negotiate your interest rate at the dealership?
Some makers offer lower interest rate than others (ex: 4.9% at Honda which Dodge doesn't offer). Can you negotiate your interest rate through the dealership or are they typically set?|||you absolutely can negotiate with them, however if the other manufacturer has a "sub vented interest rate the only option is for the finance manager to get creative. he can actually give you a 0% up to 72 months by pre paying your interest in advance. chase offers it , soveriegn too. the dealer doesnt want to loose you business but understand they arnt always that creative. also note: dodge may or may not have that option, so recomend it to them . be aware that if you have negotiated the price to the bear penny they might not have the room to get you there but they should be able to get 4.9% through chase bank or soveriegn if the have it. they rates unless advertised by the manufacturer are never "set"
good luck hope that helps you!
I have to add this , thier are a lot of answers with no facts to prove them in this forumn. These people are just guessing the really dont know and shouldnt be giving false advice on somthing they have no clue. sorry but i am getting tired of watching people get told something that just isnt true.
again, good luck|||I did, depends on your credit, and what lending institution they go through.|||the interest rate is decided by the loan underwriters based on your credit. the dealer only advertises the rate through the manufacturer's financing.....like ford motor credit etc.|||the dealers offer special interest rates at different times. in order to get the lowest interest rate you have to have excellant credit. some dealers offer 0% financing. you will have to check around. the interest rates are usually coming from the manufacturer. the dealers also use different banks and try to get you the lowest rate.|||your credit matrix determines your rate. i'm a finance guy and no bank will move on the rate unless you opt out of the prepayment penalty or some other neutralizing agent. giving them a larger down payment would actually entice them to raise your rate, as the larger down payment deprives them of future interest revenues.|||It depends on your credit. The rates advertised are for people with perfect credit and a good sized down payment. Car dealerships deal with certain finance companies so your rate is dependent on those companies. If you have good credit and want to get a good finance rate your best bet is to go to your bank. I know my bank offers very low finance rates. Then you can go to whatever car dealer you want.|||Dealers will always attempt to hold 2 or 3 percent. They are legally entitled to that. So, if the bank has approved the loan at 4% the dealer can try to charge as much as 7%. The rate is VERY negotiable. Rate reductions from the manufacturer are often in lieu of rebates. Best to get the rebate and a low APR from the local market. The rate is negotiable regardless of credit history, but will be less for better credit.|||Yes, most major car dealerships are setup with several finicial institutions the pay a low rate (below 6%) because of the amount of business they bring in for the banks, and then charge you another rate. Whether or not theyll play the numbers with you depends on a few things, do they really need to get rid of this car, how long has the car been on the lot is it a popular car (will somebody else buy in the near future). Try getting the salesman to lower the price on the vehicle before you go after the interest rate.|||Yes, depending on how much money you have for a down payment (and/or trade-in value), how desperate they are to sell you a car, your credit rating, and the amount of debt you currently have - you can sometimes swing a lower rate.
Always check with your bank or other financial institutions - if you have a good relationship with them, you can sometimes get lower rates than even the dealerships will offer you. Or if you still want to use the dealership - you can use it to talk them down.
When it comes to price or interest rate - always be willing to walk away. Never fall in love with a car, and then start trying to deal - or they will eat you alive.|||Assuming excellent credit, everything is negotiable, except for tag, title and doc fees. First of all, dealers aren't banks, they are brokers, which means they shop you around, get a few rates, add a few points, then give that rate for you.|||Mario is right, the interest rates are negotiable. You can compare APR at a dealership between going directly to your bank. If the F %26amp; I team is aggressive and creative, they will be able to meet all your demands because they want that side of your business as well.
good luck hope that helps you!
I have to add this , thier are a lot of answers with no facts to prove them in this forumn. These people are just guessing the really dont know and shouldnt be giving false advice on somthing they have no clue. sorry but i am getting tired of watching people get told something that just isnt true.
again, good luck|||I did, depends on your credit, and what lending institution they go through.|||the interest rate is decided by the loan underwriters based on your credit. the dealer only advertises the rate through the manufacturer's financing.....like ford motor credit etc.|||the dealers offer special interest rates at different times. in order to get the lowest interest rate you have to have excellant credit. some dealers offer 0% financing. you will have to check around. the interest rates are usually coming from the manufacturer. the dealers also use different banks and try to get you the lowest rate.|||your credit matrix determines your rate. i'm a finance guy and no bank will move on the rate unless you opt out of the prepayment penalty or some other neutralizing agent. giving them a larger down payment would actually entice them to raise your rate, as the larger down payment deprives them of future interest revenues.|||It depends on your credit. The rates advertised are for people with perfect credit and a good sized down payment. Car dealerships deal with certain finance companies so your rate is dependent on those companies. If you have good credit and want to get a good finance rate your best bet is to go to your bank. I know my bank offers very low finance rates. Then you can go to whatever car dealer you want.|||Dealers will always attempt to hold 2 or 3 percent. They are legally entitled to that. So, if the bank has approved the loan at 4% the dealer can try to charge as much as 7%. The rate is VERY negotiable. Rate reductions from the manufacturer are often in lieu of rebates. Best to get the rebate and a low APR from the local market. The rate is negotiable regardless of credit history, but will be less for better credit.|||Yes, most major car dealerships are setup with several finicial institutions the pay a low rate (below 6%) because of the amount of business they bring in for the banks, and then charge you another rate. Whether or not theyll play the numbers with you depends on a few things, do they really need to get rid of this car, how long has the car been on the lot is it a popular car (will somebody else buy in the near future). Try getting the salesman to lower the price on the vehicle before you go after the interest rate.|||Yes, depending on how much money you have for a down payment (and/or trade-in value), how desperate they are to sell you a car, your credit rating, and the amount of debt you currently have - you can sometimes swing a lower rate.
Always check with your bank or other financial institutions - if you have a good relationship with them, you can sometimes get lower rates than even the dealerships will offer you. Or if you still want to use the dealership - you can use it to talk them down.
When it comes to price or interest rate - always be willing to walk away. Never fall in love with a car, and then start trying to deal - or they will eat you alive.|||Assuming excellent credit, everything is negotiable, except for tag, title and doc fees. First of all, dealers aren't banks, they are brokers, which means they shop you around, get a few rates, add a few points, then give that rate for you.|||Mario is right, the interest rates are negotiable. You can compare APR at a dealership between going directly to your bank. If the F %26amp; I team is aggressive and creative, they will be able to meet all your demands because they want that side of your business as well.
Is interest rate only criteria to pick a bank for my mortgage ?
I am shopping for homes and wanted to get a pre-approval letter and later get a loan from bank.
What factors do I need to consider to say that the bank what I am picking is the best one I got ?
Just checking the interest rate,my downpayment is enough ?
I have 800+ fico, 5 yrs work history, 20% downpayment.|||Check also the points the bank is charging, and the loan fees, and ask which escrow company they use and then check the fees AND charges of that escrow company.
All of these items will raise your loan cost considerably and vary from institution to institution.
What factors do I need to consider to say that the bank what I am picking is the best one I got ?
Just checking the interest rate,my downpayment is enough ?
I have 800+ fico, 5 yrs work history, 20% downpayment.|||Check also the points the bank is charging, and the loan fees, and ask which escrow company they use and then check the fees AND charges of that escrow company.
All of these items will raise your loan cost considerably and vary from institution to institution.
What interest rate can i get with the VA loan and how much money do i have to make to get the loan?
I need to know what kind of interest rate i can get with the VA loan and for how long do i have to have a job and how much do i have to make before I can receive the loan?|||it depends on the price of the home
and your credit and income.
5.5% 1 yr, with a good work history;
3 yrs with none.|||HI ,my names is Joy Rose.i saw your question in yahoo answer .i decide to referred anybody who is dire in need of loan to this God fearing man because i have been SCAMMED twice by this fake lenders.when i have bad credit is this man that gave me{ $60,000] without anyupfront fees.you can get to him via Email james.wood8483@yahoo.com. tell him joy rose referred you to him who he gave a loan to.Goodluck
thanks,from joyrose
and your credit and income.
5.5% 1 yr, with a good work history;
3 yrs with none.|||HI ,my names is Joy Rose.i saw your question in yahoo answer .i decide to referred anybody who is dire in need of loan to this God fearing man because i have been SCAMMED twice by this fake lenders.when i have bad credit is this man that gave me{ $60,000] without anyupfront fees.you can get to him via Email james.wood8483@yahoo.com. tell him joy rose referred you to him who he gave a loan to.Goodluck
thanks,from joyrose
What interest rate on a mortgage can you expect with poor credit?
If bankruptcy was declared within the last seven years but I have a couple of years of solid income, savings, and good credit, what kind of interest rate might I expect on a mortgage?|||It all depends on the lender that you go thru ....
My realtor says that he can get anyone with a 595 or better credit score a No Down payment loan at about 6% FIXED .
I'd suggest that you call around or visit in person, the various lenders , including Local indy banks ... AVOID the Mortgage Brokers and go witha DIRECT LENDER as you'll save a few $1,000 at closing ....|||If it has been more than 2 years and you have had steady income for the past 2 years than your interested rate would be approximately 6.75. This depends on the type of loan you want and who is giving it to you.
If you have really bad credit you may not get pre-qualified for any amount.
Don't get an adjustable rate. That is just crazy to do nowadays. Make sure it is fixed.|||you can go FHA now and get a good rate if you have been discharge 2 years or longer
I am a mortgage banker in TN %26amp; KY|||You would get a 30 year fixed at 9.75%. Or an adjustable starting at 5.875% for the first 6 months... life of loan max of 11.875%.|||Above 7% for sure!
My realtor says that he can get anyone with a 595 or better credit score a No Down payment loan at about 6% FIXED .
I'd suggest that you call around or visit in person, the various lenders , including Local indy banks ... AVOID the Mortgage Brokers and go witha DIRECT LENDER as you'll save a few $1,000 at closing ....|||If it has been more than 2 years and you have had steady income for the past 2 years than your interested rate would be approximately 6.75. This depends on the type of loan you want and who is giving it to you.
If you have really bad credit you may not get pre-qualified for any amount.
Don't get an adjustable rate. That is just crazy to do nowadays. Make sure it is fixed.|||you can go FHA now and get a good rate if you have been discharge 2 years or longer
I am a mortgage banker in TN %26amp; KY|||You would get a 30 year fixed at 9.75%. Or an adjustable starting at 5.875% for the first 6 months... life of loan max of 11.875%.|||Above 7% for sure!
What interest rate will I be charged for a generic loan if I walked into a bank today?
I need the market interest rate for the past three years for an analysis, but have got no idea where to get the data...I keep coming across federal rates and prime rates which have been constant for the past three years and know these are being used as a basis for calculating all other rates...would be great if someone could elaborate and point me in the right direction as to where to find the data...Thanks!|||It depends on the type. If it's a commercial mortgage you could find rates as low as 5.5%.|||The rate varies from bank to bank.It may depend on how much you borrow,the length of the loan and whether the loan is secured or not.
How do i get a lower interest rate on my citi credit card?
I have a card with something like 18% interest and a $3000 limit, it does not make sense to use it at all with that interest rate. Help?|||Call and ask them to lower your rate or apply for a new card and do a balance transfere.
Good Luck!|||a lot of times you can call and ask for one. they will "him-haw" around and act like it's really hard, then they will generally either lower it a few points or come up with a promotional rate to last for a few months to a year. if they don't, just threaten to leave - saying that you don't really want to leave, but you just might have to go where you can save money. if nothing works, then find another card. (or, better yet %26amp; what we are working towards, just use cash :)|||I would apply for one with a better interest rate...
This website will be able to help you: Compare all the best credit cards鈥?br>
http://bestcreditcard.newcreditapplications.com/
Good Luck|||Call them and ask for a lower rate. If they don't give you one, cancel the card and get one from someone else.|||Nooo!!! dont cancel that card here is a little tip. Ok first make sure that you are current on the card and that you have not maxxed out the card or have it near maxxing. make sure also that you are not at the default APR. Second call the credit card company and call the accounting deparment. Ask them to lower the interest rate of the card. If they do not want to lower it then just tell them that you have recieved another offer by another lender with the same limit but way lower APR like 9%.
And that you will transfer what you owe them to that card. Most likely they will work with you IF you have been current, have not missed payments. Whatever you do dont threaten them with cancelling its best if you leave it open because if you close that account the will affect your credit to debt ratio which in turn will lower your score by some points.
Just keep the card and use it for very small things that you can pay off in one payment, like for filling up your gas tank or groceries. Even if you dont use the card it helps you build a good credit score.
Good Luck!|||a lot of times you can call and ask for one. they will "him-haw" around and act like it's really hard, then they will generally either lower it a few points or come up with a promotional rate to last for a few months to a year. if they don't, just threaten to leave - saying that you don't really want to leave, but you just might have to go where you can save money. if nothing works, then find another card. (or, better yet %26amp; what we are working towards, just use cash :)|||I would apply for one with a better interest rate...
This website will be able to help you: Compare all the best credit cards鈥?br>
http://bestcreditcard.newcreditapplications.com/
Good Luck|||Call them and ask for a lower rate. If they don't give you one, cancel the card and get one from someone else.|||Nooo!!! dont cancel that card here is a little tip. Ok first make sure that you are current on the card and that you have not maxxed out the card or have it near maxxing. make sure also that you are not at the default APR. Second call the credit card company and call the accounting deparment. Ask them to lower the interest rate of the card. If they do not want to lower it then just tell them that you have recieved another offer by another lender with the same limit but way lower APR like 9%.
And that you will transfer what you owe them to that card. Most likely they will work with you IF you have been current, have not missed payments. Whatever you do dont threaten them with cancelling its best if you leave it open because if you close that account the will affect your credit to debt ratio which in turn will lower your score by some points.
Just keep the card and use it for very small things that you can pay off in one payment, like for filling up your gas tank or groceries. Even if you dont use the card it helps you build a good credit score.
How do you get your credit card interest rate lowered?
I have heard that there are ways to get your interest rate lowered. What are they. I just got off the phone with my credit card company and asked if I could get my interest rate lowered and they said no. They said I have the lowest interest rate they offer at 11.5%. Is it a myth that it's possible to get your rate lowered?|||It's not something that's just doled out because that's how credit card companies make their money.
In the rare even that they oblige you, you have to :
1. Have an impeccable payment history, no lates or skipped payment on credit card or any other accounts
2. Have a good existing credit score
3. Have had the account for a minimum of 3 years.
Nowadays it's a rarity that they're lowering rates in the wake of the credit crunch.
|||if you have paid the bill on time, always, have not utilized all of the credit on the card, haven't opened up any other cards, and your score is between 750-800, you present all of these things to the company. If they still reject you, tell them you are moving the balance to another card with "x%" and tell them to jump in a lake. They will probably see better of you then.|||what I have done is called the credit card company and I usually tell that I want to make their card my primary card and to increase my credit line once they do that you tell them that in order for you to feel comfortable with that being your primary card you would like to get a lower rate because you get offers in the mail all the time with lower rates and that you understand they are intro rates but your interest rate needs to be more competative other wise you will cancel and get a better card, check out www.fastcreditcardapprovals.com to compare cards side by side on rates, fees and rewards use this info when calling them. |||Switch your balance to a new credit card with a 0% introductory rate. 11.5% is faily low, some people do have up to 32% I think. I personally have never paid CC interest in my life due to paying in full each month. Don't spend any more than you have in the bank-simple.|||If you switch to a new credit card company make sure to look that there is no balance transfer fee, the interest rate is not variable, and that there is no annual fee. |||call the credit comp. tell them you need a lower rate or you will be going elsewhere it works every time
i went from 10.5 to 7.5 with an apology.|||I have never heard of it. If it does exist, it probably has some sort of "catch" behind it.
In the rare even that they oblige you, you have to :
1. Have an impeccable payment history, no lates or skipped payment on credit card or any other accounts
2. Have a good existing credit score
3. Have had the account for a minimum of 3 years.
Nowadays it's a rarity that they're lowering rates in the wake of the credit crunch.
|||if you have paid the bill on time, always, have not utilized all of the credit on the card, haven't opened up any other cards, and your score is between 750-800, you present all of these things to the company. If they still reject you, tell them you are moving the balance to another card with "x%" and tell them to jump in a lake. They will probably see better of you then.|||what I have done is called the credit card company and I usually tell that I want to make their card my primary card and to increase my credit line once they do that you tell them that in order for you to feel comfortable with that being your primary card you would like to get a lower rate because you get offers in the mail all the time with lower rates and that you understand they are intro rates but your interest rate needs to be more competative other wise you will cancel and get a better card, check out www.fastcreditcardapprovals.com to compare cards side by side on rates, fees and rewards use this info when calling them. |||Switch your balance to a new credit card with a 0% introductory rate. 11.5% is faily low, some people do have up to 32% I think. I personally have never paid CC interest in my life due to paying in full each month. Don't spend any more than you have in the bank-simple.|||If you switch to a new credit card company make sure to look that there is no balance transfer fee, the interest rate is not variable, and that there is no annual fee. |||call the credit comp. tell them you need a lower rate or you will be going elsewhere it works every time
i went from 10.5 to 7.5 with an apology.|||I have never heard of it. If it does exist, it probably has some sort of "catch" behind it.
What is the annual rate of interest by the bank on Edwin鈥檚 deposit?
Edwin deposited a check of $12,375.93 in a bank and after 2 months having no other transaction his account was $12,500. The bank pays interest rate compounded every month.|||Annual rate of interest in percent鈥攛:
$12,375.93(1 + [x/100]/12)虏 = $12,500
12,375.93(1 + 0.00083333333x)虏 = 12,500
12,375.93(1 + 0.00166666667x + 0.00000069444x虏) = 12,500
12,375.93 + 20.6265499174x + 0.00859434082x虏 = 12,500
0.00859434082x虏 + 20.6265499174x = 124.07
x虏 + 2,400.01535305x = 14,436.2438723
x虏 + 1,200.00767652x = 14,436.2438723 + 1,200.00767652虏
x虏 + 1,200.00767652x = 14,436.2438723 + 1,440,018.4237
(x + 1,200.00767652)虏 = 1,454,454.66757
x + 1,200.0077 = 1,206.0077
x = 6
Answer: 6% is the annual rate of interest鈥斅hew!|||12500 / 12375.93 / 2 = 1.01 x 12 = 6.06% Annually.
Breakdown:
Devide the new balance (12500) by the deposit, to find out the percent increase of the last two months, then devide by 2 to find the percent increase per month, then multiply by 12 to work out the anual percent increase.
ANSWER IS = 6%
Hope this helps!
$12,375.93(1 + [x/100]/12)虏 = $12,500
12,375.93(1 + 0.00083333333x)虏 = 12,500
12,375.93(1 + 0.00166666667x + 0.00000069444x虏) = 12,500
12,375.93 + 20.6265499174x + 0.00859434082x虏 = 12,500
0.00859434082x虏 + 20.6265499174x = 124.07
x虏 + 2,400.01535305x = 14,436.2438723
x虏 + 1,200.00767652x = 14,436.2438723 + 1,200.00767652虏
x虏 + 1,200.00767652x = 14,436.2438723 + 1,440,018.4237
(x + 1,200.00767652)虏 = 1,454,454.66757
x + 1,200.0077 = 1,206.0077
x = 6
Answer: 6% is the annual rate of interest鈥斅hew!|||12500 / 12375.93 / 2 = 1.01 x 12 = 6.06% Annually.
Breakdown:
Devide the new balance (12500) by the deposit, to find out the percent increase of the last two months, then devide by 2 to find the percent increase per month, then multiply by 12 to work out the anual percent increase.
ANSWER IS = 6%
Hope this helps!
What's the average interest rate for a new motorcycle loan?
I hear it all the time: "Do research before you ask for a loan or they'll give you a ridiculous interest rate." So what's the average interest rate for a new motorcycle? Particularly a loan for $3500 approximately.|||I bought a brand new kawasaki in 2006. I financed $2800 through kawasaki good times credit and my intrest rate was 17%.
Can a bank not raise their mortgage interest rate if others do?
Seems in Canada as soon as one bank raises it's interest rate for a 5 year mortgage then all the other major banks follow suit soon after. Why? Can a bank not raise it's rate and get more business from people looking to get the best rate to purchase a home?|||The prime rate has little to do with real estate loan interest rates.
What effects RE interest rates is the bond rates. Generally speaking all lenders get the money that they make RE loans with is from the same place, the Federal Reserve. Lenders seldom portfolio the RE loans they make, but package them and sell them to investors. The lender will often service those loans for a fee in behalf of the investor but the bank usually doesn't own the loan.|||Yes since the increase is due to the Government increase in the Prime lending rate. That is why all banks increase at the same time|||The rates are based on government set rates. So that's why they all change at once.
What effects RE interest rates is the bond rates. Generally speaking all lenders get the money that they make RE loans with is from the same place, the Federal Reserve. Lenders seldom portfolio the RE loans they make, but package them and sell them to investors. The lender will often service those loans for a fee in behalf of the investor but the bank usually doesn't own the loan.|||Yes since the increase is due to the Government increase in the Prime lending rate. That is why all banks increase at the same time|||The rates are based on government set rates. So that's why they all change at once.
What is a decent interest rate for refinancing my college loans?
I have $30,000 in college loans. I want to consolidate them into one payment with a decent interest rate.|||Hi,
I used "Credit Solution" to settle my college loan.They managed to reduce my loans up to 58%.It's legitimate.I came across this company on NBC News Special Edition.Check it out here:
http://urlhawk.com/4ys|||Was 6.8 fixed modified by a mix of average of all loans rounded up to the nearest 1/8. When you consolidate at end of six month grace period (process takes two months start at 4 months) almost all consolidations are now mostly done by D.o.e dept of education. Private loans have highest rates.
If you are becoming a teacher, or law enforcement related job, or medical there are all new forgiveness loans which were instituted in Sept 07. Here is pho num for Dept of Ed. Remember rates are coming down, but if you have to consolidate now ok to do so, take two courses even if online, and can go into non payment status again and get 6 months grace back. D.O.E. = 1-800-557-7392 // other good num (have your fasfa num ready, pin num, will give you info, and very helpful people on other end of pho Fed aid borrower services 1-800-557-7392 // forgiveness website is listed at website www.answersfordebt.com remember though each state is different and have to go thru employer who probably won't know what you are talking about if you ask about forgiveness programs. Punch this in search engine higher ed watch and stay in touch w/them, this is the lobbying group that got all laws changed in sept. 07 and is responsible for you to now borrow more from govt. at lower interest rates, and more money to borrow.
There are no "decent interest rates" if going thru govt. which is adviseable, all the same.
Private loans are higher, maybe find a lower rate private, but will have to have one heck of a credit score. Only takes 3 pmts in a row on time to rehab delinquent loan to d.o.e., so don't be afraid, to start paying again, if went delinquent.
Take c/o student loans. There is no way out of them, no bnkrptcy, old joke in the industry was only way to get out of a student loan was to get a passport or cut off your leg. Old law required 110% disabled, and never forgot during training as loan advisor when teacher was asked how do you get extra 10 %, she said you would already have to be disabled, and then lose an arm or leg.
New law says if indigent after 25 years, can get forgiveness.
They have collection laws don't have to go to court, can grab income tax refunds, and a collection agency, yeah right a collection agency can garnishee your wages if you don't make arrangements w/them, all they need is the initials of the administrator of state you reside in, that they tried to work out arrangements and were unsuccessful, you were not cooperative, only debt can get arrested for not paying though rare, a couple of times, doctors making hundreds of thousands of dollars, weren't paying did they use that part of law.
Don't be afraid to consolidate, and again best to go thru D.O.E.
I used "Credit Solution" to settle my college loan.They managed to reduce my loans up to 58%.It's legitimate.I came across this company on NBC News Special Edition.Check it out here:
http://urlhawk.com/4ys|||Was 6.8 fixed modified by a mix of average of all loans rounded up to the nearest 1/8. When you consolidate at end of six month grace period (process takes two months start at 4 months) almost all consolidations are now mostly done by D.o.e dept of education. Private loans have highest rates.
If you are becoming a teacher, or law enforcement related job, or medical there are all new forgiveness loans which were instituted in Sept 07. Here is pho num for Dept of Ed. Remember rates are coming down, but if you have to consolidate now ok to do so, take two courses even if online, and can go into non payment status again and get 6 months grace back. D.O.E. = 1-800-557-7392 // other good num (have your fasfa num ready, pin num, will give you info, and very helpful people on other end of pho Fed aid borrower services 1-800-557-7392 // forgiveness website is listed at website www.answersfordebt.com remember though each state is different and have to go thru employer who probably won't know what you are talking about if you ask about forgiveness programs. Punch this in search engine higher ed watch and stay in touch w/them, this is the lobbying group that got all laws changed in sept. 07 and is responsible for you to now borrow more from govt. at lower interest rates, and more money to borrow.
There are no "decent interest rates" if going thru govt. which is adviseable, all the same.
Private loans are higher, maybe find a lower rate private, but will have to have one heck of a credit score. Only takes 3 pmts in a row on time to rehab delinquent loan to d.o.e., so don't be afraid, to start paying again, if went delinquent.
Take c/o student loans. There is no way out of them, no bnkrptcy, old joke in the industry was only way to get out of a student loan was to get a passport or cut off your leg. Old law required 110% disabled, and never forgot during training as loan advisor when teacher was asked how do you get extra 10 %, she said you would already have to be disabled, and then lose an arm or leg.
New law says if indigent after 25 years, can get forgiveness.
They have collection laws don't have to go to court, can grab income tax refunds, and a collection agency, yeah right a collection agency can garnishee your wages if you don't make arrangements w/them, all they need is the initials of the administrator of state you reside in, that they tried to work out arrangements and were unsuccessful, you were not cooperative, only debt can get arrested for not paying though rare, a couple of times, doctors making hundreds of thousands of dollars, weren't paying did they use that part of law.
Don't be afraid to consolidate, and again best to go thru D.O.E.
What is the highest interest rate for savings accounts in the world?
Where would someone find a bank that has a really good interest rate? International would be preferred.|||There are many banks offering higher interest rates especially in developing countries, but they also arry risks such as closing down and not getting your money back except for that which is insured.|||11% i think|||To find more about this visit:http://www.raretipsandtricks.com/finance
Why do interest rate changes affect the price of longer term bonds more?
Hello,
I understand the concept that higher interest rates mean lower bond prices and vice versa.
However, what I don't understand is why an interest rate decrease causes the price of long-term bonds to rise at a higher percentage than the rise of short-term bond prices.
Likewise, if interest rates go up, why would the long-term bond prices do down at a higher percentage than short-term bond prices.
Would appreciate anyone's help.
Thanks!|||The current price of a bond is determine by computing its present value using the current interest rate of similar bonds rather than the interest rate at which it was issued. The present value of a bond is the sum of the present value of a future amount (the face value of the bond) and the present value of an annuity (the bond's coupon payments). As the term to maturity increases, the effect of interest rate changes becomes greater. As the present value formulas are exponential functions, the effect increases with time at an increasing rate. The proper term for this effect is interest rate sensitivity.
This should become apparent if you do some sample present value (PV) computations in a spread sheet. You can do it in two steps: PV of a future amount and PV of an annuity.|||The assumption would be that the long term bond would be more valuable because it has more years of the higher interest rate.
i.e. If a 25 year bond is 10% coupon priced at 100 and interest rates are 10%
Now interest rates go down to 5%
In theory your bond and the short bonds should go to 200
But you can see that you have secured 10% for the next 25 years against the current rate of 5%
Of course rates could shoot back to 10% the next day but unlikely.
It wouldn't be the case if rates looked historically low. If rates were 2% you wouldn't want to lock in with a 25 year bond.
I always remember buying an undated PIB (Coventry BB) with a 10.5% coupon at about 拢101% about 10 years ago. It is still paying 10.5% and its price is now about 拢180%|||Interest rate changes affect long term bonds less than short term bonds. However, If interest rates fall then the price of long term bonds rise...the bonds are then said to be trading at a premium. If rates rise the price of bonds fall..the bonds are said to be trading at a discount.|||Look at zero coupon bonds, first. The value of a zero coupon bond is:
P(y) = 100/(1+y/2)^N = 100*(1+y/2)^(-N)
where P(y) is the price, y is the yield and N is the number of half-year periods until you get your cash flow. How much does the price change for a small change in yield? If you know Calculus, you know that you can take the derivative of the Price function %26amp; that will tell you the rate of change.
The derivative of the price function is:
P'(y) = -50*N*(1+y/2)^(N-1) = P(y)*(N/2)/(1+y/2)
Note that bigger values of N will have a greater effect on the change in price.
OK -- that is the math.
Not here is something that might explain the intuition. Suppose you have a million dollars and you put it in the bank today at 5% interest. How much is it worth tomorrow? Just a little over a million, right? How much is it worth in five years? (1MM*1.05^5).
Now -- suppose interest rates go up to 6%. How much is it worth tomorrow? Not much more than when rates were worth 5%. But how much will it be worth in five years? A lot more -- because you are getting more than $10K extra in interest every year.|||you can buy and sell the bonds.so people who buy them will pay what the current interest in the world is...not the interest rate when someone else bought the bond........maybe a couple of years ago...........|||It is based on current situation and futurre expectation.
The deposits, bonds, commercials papers are various competitive avenues for investments and speculations suitable for different categories . Money manages, long and short term investors all go in different directions
I understand the concept that higher interest rates mean lower bond prices and vice versa.
However, what I don't understand is why an interest rate decrease causes the price of long-term bonds to rise at a higher percentage than the rise of short-term bond prices.
Likewise, if interest rates go up, why would the long-term bond prices do down at a higher percentage than short-term bond prices.
Would appreciate anyone's help.
Thanks!|||The current price of a bond is determine by computing its present value using the current interest rate of similar bonds rather than the interest rate at which it was issued. The present value of a bond is the sum of the present value of a future amount (the face value of the bond) and the present value of an annuity (the bond's coupon payments). As the term to maturity increases, the effect of interest rate changes becomes greater. As the present value formulas are exponential functions, the effect increases with time at an increasing rate. The proper term for this effect is interest rate sensitivity.
This should become apparent if you do some sample present value (PV) computations in a spread sheet. You can do it in two steps: PV of a future amount and PV of an annuity.|||The assumption would be that the long term bond would be more valuable because it has more years of the higher interest rate.
i.e. If a 25 year bond is 10% coupon priced at 100 and interest rates are 10%
Now interest rates go down to 5%
In theory your bond and the short bonds should go to 200
But you can see that you have secured 10% for the next 25 years against the current rate of 5%
Of course rates could shoot back to 10% the next day but unlikely.
It wouldn't be the case if rates looked historically low. If rates were 2% you wouldn't want to lock in with a 25 year bond.
I always remember buying an undated PIB (Coventry BB) with a 10.5% coupon at about 拢101% about 10 years ago. It is still paying 10.5% and its price is now about 拢180%|||Interest rate changes affect long term bonds less than short term bonds. However, If interest rates fall then the price of long term bonds rise...the bonds are then said to be trading at a premium. If rates rise the price of bonds fall..the bonds are said to be trading at a discount.|||Look at zero coupon bonds, first. The value of a zero coupon bond is:
P(y) = 100/(1+y/2)^N = 100*(1+y/2)^(-N)
where P(y) is the price, y is the yield and N is the number of half-year periods until you get your cash flow. How much does the price change for a small change in yield? If you know Calculus, you know that you can take the derivative of the Price function %26amp; that will tell you the rate of change.
The derivative of the price function is:
P'(y) = -50*N*(1+y/2)^(N-1) = P(y)*(N/2)/(1+y/2)
Note that bigger values of N will have a greater effect on the change in price.
OK -- that is the math.
Not here is something that might explain the intuition. Suppose you have a million dollars and you put it in the bank today at 5% interest. How much is it worth tomorrow? Just a little over a million, right? How much is it worth in five years? (1MM*1.05^5).
Now -- suppose interest rates go up to 6%. How much is it worth tomorrow? Not much more than when rates were worth 5%. But how much will it be worth in five years? A lot more -- because you are getting more than $10K extra in interest every year.|||you can buy and sell the bonds.so people who buy them will pay what the current interest in the world is...not the interest rate when someone else bought the bond........maybe a couple of years ago...........|||It is based on current situation and futurre expectation.
The deposits, bonds, commercials papers are various competitive avenues for investments and speculations suitable for different categories . Money manages, long and short term investors all go in different directions
What is a typical interest rate on a home loan?
So, I want to buy a house and want to know what a decent interest rate is. Assume that the loan will be $300,000. I want to be realistic about it, I don't want a 'low' rate, but give me a normal rate that I would be likely to get today. I live in UT if the rates change state to state.|||As the others said, it is impossible to quote you a rate.
How much down payment you are bringing in, how long a term you are looking for, your credit score, and many other factors will be applicable.
What I would suggest is to sit down with a local mortgage broker, perhaps where you bank would be a good place to start, and get a quote.
I would caution you to not just look at interest rate, compare the entire loan package. Closing costs, prepayment penalties, points and such can make a great rate into a lousy loan. Internet lenders are great for this, quoting a fantastic rate, then charging all sorts of fees to get this rate.|||There is no one that can quote a rate of any type with accuracy without knowing your credit score, the mortgage loan program you are qualified for,as each program has a rate of it's own.
There is no such thing as an normal interest rate,a gain each mortgage loan is unique in it's own as the borrower with the same credit score might not get the same interest rate based on one factor on his credit report.
If you are looking for a range of current interest rate which would have no effect on the rate you would get, then you would be better served to look in your local newspaper. They would report the lowest rate for the day. Currently interest rates are as low as 2.75% for an adjustable or 4.25% for a thirty year fixed rate.
Your rate would be based on your credit score, a ratio as established by your lender as well as how you have paid your debts listed on your credit report.
I hope this has been of some benefit to you, good luck.
"FIGHT ON"|||Anyone that quotes you a rate based on the information you have given, is not doing you any favors. There are many factors that go into what rate you get, such as;
Property type
Property occupancy
Credit Score
Loan to Value
Location
Loan Amount
Loan Type
Your rate on 300K could be anywhere from 2.5% on a 5/1 ARM to 10% for a hard money private investor loan. If you want a rate, you need to see a licensed loan officer and provide details of your specific scenario. any other answer you get is 100% useless.|||It depends upon your credit and the type of mortgage.
Go here:
http://www.bankrate.com/
How much down payment you are bringing in, how long a term you are looking for, your credit score, and many other factors will be applicable.
What I would suggest is to sit down with a local mortgage broker, perhaps where you bank would be a good place to start, and get a quote.
I would caution you to not just look at interest rate, compare the entire loan package. Closing costs, prepayment penalties, points and such can make a great rate into a lousy loan. Internet lenders are great for this, quoting a fantastic rate, then charging all sorts of fees to get this rate.|||There is no one that can quote a rate of any type with accuracy without knowing your credit score, the mortgage loan program you are qualified for,as each program has a rate of it's own.
There is no such thing as an normal interest rate,a gain each mortgage loan is unique in it's own as the borrower with the same credit score might not get the same interest rate based on one factor on his credit report.
If you are looking for a range of current interest rate which would have no effect on the rate you would get, then you would be better served to look in your local newspaper. They would report the lowest rate for the day. Currently interest rates are as low as 2.75% for an adjustable or 4.25% for a thirty year fixed rate.
Your rate would be based on your credit score, a ratio as established by your lender as well as how you have paid your debts listed on your credit report.
I hope this has been of some benefit to you, good luck.
"FIGHT ON"|||Anyone that quotes you a rate based on the information you have given, is not doing you any favors. There are many factors that go into what rate you get, such as;
Property type
Property occupancy
Credit Score
Loan to Value
Location
Loan Amount
Loan Type
Your rate on 300K could be anywhere from 2.5% on a 5/1 ARM to 10% for a hard money private investor loan. If you want a rate, you need to see a licensed loan officer and provide details of your specific scenario. any other answer you get is 100% useless.|||It depends upon your credit and the type of mortgage.
Go here:
http://www.bankrate.com/
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