Types of Credit

There are several types of credits that will borrow in our lifetime. Such credits might be:

A home loan

Personal Loan for buying home appliances,interior deco and furniture.

Car Loan

Credit Cards

Interest Free Schemes

When borrowing credit we always need to remember the not only do we have to pay back the amount we borrowed but we also have to pay interest.

What is interest?

Interest is a fee paid by the borrower of assets to the owner as a form of compensation for the use of the assets.

Money is paid typically back as a percentage of the borrowed amount, this is usually paid over a certain time period. This percentage is known as the 'Interest Rate'. 

It is calculated by dividing the amount of interest by the amount of principal. 

For example , if a lender such as a bank charges customers $90 in a year of loan of $1000, then the interest rate would be 90/1000 which equals 9%.

Hopefully you have learned something new about credit and interest rates :)

Home Loan

Car Loan

Interest Rates