Debt rate – or effective interest rate, as it is also called – what is it? an elucidation on simplicol-kraski.com
Now, there could come a long, dry tray-dry answer that no normal people in this world would understand or bother to read.
But it is important to understand terms such as the APR , Debt rate and interest rate if you are in a situation where you are considering borrowing money.
And that’s why at Good Finance we have made it easy for ordinary people to understand terms like Debt Interest.
Debt rate – explained in 3 simple steps:
- What is effective interest rate?
- The principle behind interest rates?
- Can Good Finance’s Debt Rate Compare with Other Loans?
If you are not a reading horse, check out the video below. It explains it all in a short moment. You can also jump directly in and visit our loan calculator to see how much you can borrow here …
What does the interest rate mean?
In short, this is the loan’s annual interest rate – including interest rates. And the total interest rate therefore depends on how often the interest rate is attributed.
Let’s try with an example:
If every month 10% interest is credited, the amount gets bigger and bigger the longer the loan runs – so far so good.
Thus, each month interest is credited to an amount already attributed to interest.
This means that if you borrow 10 lego blocks, then after the first month you have to pay 1 lego block in interest. Next month, there will be 11 lego blocks attributed to 10% interest.
It then repeats every month (if the interest rate is thus attributed every month).
And that is the principle of the term “interest rate”.
Why is it not fair for loans at Good Finance?
The debtor interest rate is, as I said, the loan’s annual interest rate, which includes all “interest rates”.
And it therefore depends a lot on how many interest rate allocations – how many small towers of bricks – we have in a year. If there are fewer, the amount becomes smaller.
BUT – at Good Finance we do not charge interest rates, so you don’t have to worry about them.
Our advice to you is to look at the loan calculator and the real numbers when / if you need to borrow money.
You should ask yourself the following questions:
- How much do you want to borrow?
- How much can you pay back each month?
- What do you end up having of costs?
If your finances can handle the costs, then in some situations it may be a good solution to borrow the money for the things that can’t wait until later.
We hope you have become a bit clearer on the concept of debt / interest rate.
If you want to see how much it would cost you to borrow from Good Finance, click on the blue button below and hop into our loan calculator.