When looking for a credit alternative, the interest rate of the loan is a major concern of the interested parties, and not by chance – the tax plays an important role in the total cost of the loan and the repayments.
Therefore, in this post we will explain a little about how the interest rate of a loan works. Check out!
How do interest rates work?
When determining the interest rate of a loan you need to take into account the maintenance costs of the service and the credit risk. That is, what is the chance of the customer defaulting and the bank losing money.
Therefore, there is a variation in interest rates on loans. The less guarantee the bank has that it will receive the loan, the higher the interest rates will be. For this reason, vehicle and real estate financing tend to have much more attractive interest rates.
The Selic Rate Influence
All interest rates that exist in the market are stipulated with reference to a base rate. This rate is called SELIC – Special Settlement and Custody System – and is the basic rate of the Brazilian economy and is determined by the Government.
Both what is charged for a loan and what is repaid in an application is based on the Selic Rate. It is the starting point for determining all other interest rates as well as the interest rate on a loan.
The interest rate of a loan varies depending on what?
The interest rate of a loan varies because the financial institution takes into account several factors such as:
SELIC – Basic Economy Rate
CET – Total Effective Cost
Credit released amount
Contract payment term
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