What best determines whether a borrower’s investment on an adjustable rate loan goes up or down?

What best determines whether a borrower’s interest rate?

As we alluded to, the factor that best determines whether a borrower’s investment on an adjustable-rate loan goes up or down is the current market. The market’s condition drastically impacts the rate of investment. The market can change extensively between the time you make an investment and the time the loan ends.

What is the relationship between a borrower’s credit score and their interest rate on a loan?

A higher score increases a lender’s confidence that you will make payments on time and may help you qualify for lower mortgage interest rates and fees. Also, some lenders may reduce their down payment requirements if you have a high credit score.

What best explains the relationship between a borrower’s credit score and a down payment requirement quizlet?

What best explains the relationship between a borrower’s credit score and a down payment requirement? Someone with a high credit score may be required to make a lower down payment. over time, usually many years.

What factors can a lender legally use to charge you a higher interest rate?

Auto lenders use the following factors to determine your interest rate:

  • Your credit scores. Your credit history plays a big factor in auto loans, as well. …
  • Your down payment. …
  • Your loan term. …
  • Your car.

Which best describes the difference between simple and compound interest?

Which describes the difference between simple and compound interest? Simple interest is paid on the principal, while compound interest is paid on the principal and interest accrued.

Which best describes a way people can use personal loans to buy a house?

The personal loan can be used for anything. The lenders ask the information about where they want the money and also give the legal reason where they want to spend. The person loans need no collateral, but the interest rate is higher. There are secured personal loan if we need to lower the costs.

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What are the 5 C’s of credit?

Credit analysis is governed by the “5 Cs:” character, capacity, condition, capital and collateral. Character: Lenders need to know the borrower and guarantors are honest and have integrity.

What’s the 4 C’s of credit?

The first C is character—reflected by the applicant’s credit history. The second C is capacity—the applicant’s debt-to-income ratio. The third C is capital—the amount of money an applicant has. The fourth C is collateral—an asset that can back or act as security for the loan.

What is the advantage of a down payment to the lender?

A bigger down payment helps you minimize borrowing. The more you pay upfront, the smaller your loan. That means you pay less in total interest costs over the life of the loan, and you also benefit from lower monthly payments.

What type of credit people are most likely to use for small purchases during their lifetime is?

The type of credit people are most likely to use for small purchases during their lifetime is a credit card.

Which is an example of easy access credit?

Pawnshops, payday loans, rent-to-own, and title loans are all examples of easy access credit and how people can get fast cash. Using these services can make a bad financial situation worse, and habitually using them can create a cycle of bad debt that can be difficult to escape.

Which best describes the difference between secured and unsecured credit?

Which describes the difference between secured and unsecured credit? Secured credit is backed by an asset equal to the value of a loan, while unsecured credit is not guaranteed by a material object.

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What are the 4 factors that influence interest rates?

Here are seven key factors that affect your interest rate that you should know

  • Credit scores. Your credit score is one factor that can affect your interest rate. …
  • Home location. …
  • Home price and loan amount. …
  • Down payment. …
  • Loan term. …
  • Interest rate type. …
  • Loan type.

Who enforces the Equal Credit Opportunity Act?

Federal Trade Commission

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