If you've had financial problems in the past and need to borrow money, your options may be quite limited. If you have bad credit, any ordinary bank loans you apply for will only be available at a very high interest rate. If your credit is extremely poor, you may not be eligible for a traditional bank loan at all. Fortunately, there are still several options which may be open to you, even though some of these can carry considerable risk, such as requiring you to put up your personal assets as collateral.
tip of borrowing
Borrowing money sometimes becomes a necessity. If you need to buy a house, buy a car, or even pay your grocery bills or other expenses and you don’t have the cash, borrowing money may be your only option. Before you begin borrowing money, however, read on for the top 10 tops about borrowing money wisely.
Variable Interest Rate
A variable interest rate is an interest rate on a loan or security that fluctuates over time, because it is based on an underlying benchmark interest rate or index that changes periodically. The obvious advantage of a variable interest rate is that if the underlying interest rate or index declines, the borrower's interest payments also fall.
BREAKING DOWN 'Variable Interest Rate'
The underlying benchmark interest rate or index for a variable interest rate depends on the type of loan or security. Variable interest rates for mortgages, automobiles and credit cards may be based on a benchmark rate such as the prime rate in a country. Banks and financial institutions charge consumers a spread over this benchmark rate, with the spread depending on a number of factors such as the type of asset and the consumer's credit rating.