Although interest rates are very competitive in the market, they aren't the same. Compound interest and simple interest are all important ways to calculate interest rate depending on the request. A bank will charge higher interest rates if it thinks there's a lower chance the debt will get repaid.
It is very important that you understand how the interest rate charged on your loan/facility is calculated since it has its implication on your finances.
Impact of Interest Rate
Understanding that interest rate can impact your finances more than you may likely realize it, so it’s an important concept to gain a better understand of earl in life. Any loan you take has interest component attached to it which may take more from you than you borrowed.
It is very important to know the impact it is going to have on your finances and whether or not you have made provision for repayment throughout the period of the loan.
Note; A lot of individuals and businesses have not made significant progress due to the interest rate on their loans. Understand it or seek advice from a professional.
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