2006-12-08 12:58:59 · 3 answers · asked by Yahoo 3 in Business & Finance ➔ Personal Finance
If you are the borrower, you want to pay the least amount of loan fees (interest) as possible.
If you are the lender, you want to collect the highest amount of loan fees (interest) as possible.
Usually when both can agree (compromise/negotiate the rate) on the amount of the loan fee (interest) the loan is made.
2006-12-08 13:07:56 · answer #1 · answered by Anonymous · 0⤊ 0⤋
Interest is the cost of money for time.
If I offered you $100 now or one year from now you would say now.
If I offered you $10 now or $1,000 a year from now you'd probably say the $1,000.
The amount that would make you neutral between the choices is the interest rate you require over the period.
Because the money market is a large market with many participants, the market reaches an equilibrium and that becomes the market interst rate at which lenders and borrowers meet.
2006-12-08 21:31:21 · answer #2 · answered by Anonymous · 0⤊ 0⤋
When you borrow money from a bank or lender, they charge what is called interest. Interest usually comes in a percentage per annum. Per annum means per year. For example if I borrowed $100,000 and was charged at 2% p.a. that means every year I'd be charged 2% of $100,000 on top of what I was already paying off. The higher the percentage the more you will have to pay.
2006-12-08 21:02:32 · answer #3 · answered by blakeb155 2 · 0⤊ 0⤋