Different Kinds of loans’ Interest Rates

Today I am writing a 400 word essay of Interest Rates for my personal finance class. Student loans for example are a big money expense. They take a long time to pay off and they are a lot of money. Plus because of that amount, the interest rate is lower and then you have to make sure you pay it off as fast as you can. The reason that it would be lower instead of higher, is because when you have a large amount of money to pay off, you don’t want to end up paying all of that off in one day. If you can, you are pretty well off.

Interest Rates are definitely different depending on what the item is. If you have a credit card, that rate will be different from a car. This is because the car will most likely take longer to pay off so it typically will have a lower rate than a credit card. If you compare student loans to a car, there is a major difference. This is because student loans are usually long-lasting, I know this because there are many people that are grown up and still paying off their loans. Car loans are usually paid off within 3 to 4 years. The interest rate on a car however, is rather large. I do believe that when you get your car maintenanced that adds to the rate, depending on your contract and car. (This depends on the contract that you signed when you bought the car though.) That is why parents typically don’t buy their kids cars, because if they can learn to take care of it, then they can value it and maybe even realize the money invested in cars.

Student loans are usually very large sums of money. Because of that immense amount it would take a really long time to collect that amount of money. If you go to college, this is the reason your parents want to make sure you can afford it. They don’t want you to fall into debt and then never pay it off. Some people actually never manage to pay off their student loans and so their kids have to.

In the end, loans, and even bank accounts, have interest rates. Interest rates are different depending on the amount of money and the item. That is why if you have a car, the money goes up until you pay it all off. (It usually only goes up in small increments though.) Please like or dislike this essay. Leave comments or email me through the email on the “Contact” page. Also, if you have any other examples of items that have interest rates, please leave them in the comments! Thank you for reading!

Until next time, your friendly neighborhood Homeschooler…

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2 thoughts on “Different Kinds of loans’ Interest Rates

  1. Hi- I would encourage you to check your numbers again. You wrote:
    “If you have a credit card, that rate will be different from a car. This is because the car will most likely take longer to pay off so it typically will have a higher rate than a credit card.”

    As a general rule that I tell my own kids- “support your claims with details”. Your essay would be improved by doing the research on the various rates and supplying them for your readers.

    I like your energy on the topic. Keep writing!

    Like

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