Interest Rates in India
Interest Rates in India https://www.fundstiger.com/interest-rates-india/ How the interest rate on your loan is determined? There are many factors that affect the interest rate that you have to pay on a loan such as credit scores, collateral and so on. The following are the few factors that determine the interest rates: 1. Relation between Credit Score and Interest Rate Credit scores are taken into account while setting interest rates and the borrower with a better score gets a lower interest rate on a loan. 2. Secured Vs. Unsecured Loan and Rate of Borrowing When a loan is secured by collateral, the risk of default by the borrower decreases and hence the risk premium charged may be lower, reducing the rate of borrowing. 3. Tenor and Interest Rate The shorter the tenor of the loan, the lower the risk, since the ability of the borrower to repay the loan is less likely to change and hence lower the rate of interest. 4. Account Conduct and Rate Loan pricing also takes...