Market Rate of Loan

In relation to loans, the term market rate is most often used to describe the way in which the interest rate payable on a variable rate loan may vary. It is said that the interest payable on the loan will be the market rate, or will vary in line with market trends. For many loans, the level of interest payments is fixed in advance at the very beginning. Such loans account for the majority of loans outstanding. However, in a minority of loans the interest rate can change. Some loans allow interest payments to remain fixed for a time but to become variable afterwards. So the credit report is very important factor. If you are looking for freecreditreport for monitoring your credit, then you can browse thourgh web. There are number of websites which provides this service for free.

Interest rates for loan also depends upon a person’s credit history. Lenders often charge high interest rates to those who has bad credit history in their credit report.

In the case variable interest rate loans, the question obviously arises of what causes the interest rates to vary. This may be declared explicitly in the loan agreement or it may be left to the discretion of the lending institution. Most commonly, the level of interest rates is based on the prevailing central bank lending rate in whichever country the lender operates in.  In turn, central banks vary their lending rates for a number of reasons. Among the most common is a desire to strengthen the currency or to dampen any inflationary conditions within the economy.