If you are one of the many South Africans who are currently busy re-paying a home bond, financed car or any form of loan, then you will be aware of interest rates, it is also known as your finance charges. Interest rates are the funds that you are charged with to borrow the money from them. This is usually calculated by means of an annual percentage. Say you still owe the bank a R100 000 on your car, and you see that you are charged with R110 000, then you are charged with 10% interest rates.
You should know that there are various factors which can have an affect on your interest rates. The current inflation rate will also play a big role. When the inflation goes up, then you can be assured that you will receive higher interest rates. You’re location will also play a big a role. Some places have got higher interest rates as the living costs may differ from place to place. You will also find that the quality of the insured product will also have an affect on your interest rates.
You have probably seen that you are paying more interest for something that someone else, even though you are insuring an item which is exactly the same as the as you. The reason for this could be of your credit score, which is reflected through your credit report. You have to know that your credit score will have a direct influence on your interest rates. If your credit score is high then you can expect lower interest rates. It all depends on what financial risk you could be to the lender. This should be a wake up call for you to know how important it is to maintain a good and clear credit score. It has never been as important as today to have a healthy credit score.
Maintaining a good credit score will not only help you to obtain loans and credit but it can also have a big affect on what you will pay back at the end of the day for your loans. I would suggest that you obtain a credit report at least once a year in order to take control over your finances. We should all make an effort to save money everywhere we can due to the economic climate of today and by maintaining a good credit record will certainly help us to save money on interest rates.