Why does the longer the loan time, the higher the interest rate?
You should know that loans can be divided into short-term loans and long-term loans, usually with five years as the dividing line. For example, short-term loans with a loan term of less than 1 year, and long-term loans with a loan term of more than 5 years, and the interest rate of long-term loans will be higher than that of short-term loans. The biggest reason is that the longer the loan term, the greater the risk.
But the factors that affect the loan interest rate are not only the loan term, but also the borrower's comprehensive credit conditions, loan types and repayment methods. Therefore, in order to keep the loan interest rate from being high, the borrower must consider these matters in addition to choosing the appropriate loan term.
1. Before borrowing money, you should know your comprehensive credit situation, see if there is any overdue record, and measure your repayment ability. Try to apply for a loan with good credit information, sufficient repayment ability and low debt.
2. See if there are any assets under your name that can be mortgaged. You can apply for a loan if you have a mortgage such as a house and a car. With collateral as the guarantee of repayment ability, the loan risk will be relatively low and the loan interest rate will be lower. No assets can apply for credit loans, but be prepared for high interest rates.
3. Different repayment methods will also affect the loan interest rate to some extent. For example, the repayment method of paying interest first and then the principal will have a higher interest rate.
The above is the introduction of "why the longer the loan time, the higher the interest rate", hoping to help everyone.