| LENDICOR A Grand River USA Company |
FLEXIBLE TERM LOANS:
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| Grand River USA, LLC 48639 Hayes Rd, Suite 10 Shelby Twp MI 48315 |
| © Grand River USA, LLC 2001-2012 |
| Private Mortgage Wholesale 2180 Wealthy St SE Grand Rapids MI 49506 |
| Commercial Funding by Lendicor |
| Residential Mortgage by Lendicor Home Finance |
| Andrew Blair Licensed Broker/Originator 586.930.0202 Office 616.262.1642 Moblie 616.825.6059 E-Fax blair@gmx.com |
| Credentials: -M.A., Central Michigan University -Michigan NMLS Licensed Mortgage Broker -President, Applegate Property Owners Association -Michigan Licensed Maintenance/Alteration Contractor -Michigan Licensed Insurance Producer -Michigan Licensed Real Estate Salesperson |
| For a Confidential Analysis Call Andrew Blair 616.262.1642 586.930.0202 |
About Interest Rates
In our everyday life we keep hearing interest this, interest that. But how many of us ever
thought about what interest is? From a borrower’s perspective interest is the difference
between the amount of money borrowed and the amount of money
repaid. While repaying the debt a borrower incurs so called interest expense. On the other
hand, the money landing party earns interest revenue. Thus, in any particular lending
situation interest revenue equals interest expense. The formula used to calculate the amount
of interest is as follows:
Interest = Principal * InterestRate * Duration
where:
Principal - amount of money borrowed
InterestRate - percent paid or earned per year
Duration - number of years
For example when someone acquires a good or service and in exchange promises to make a
series of payments to the supplier he or she enters a transaction called annuity. An annuity is
a series of payments of equal amount separated by equal time intervals.
Lets consider borrowing transactions in which the present value of the future cash flows and
the transaction duration or the number of payments are fixed. A 30 year home mortgage or a
4 year car loan, for instance, are types of such transactions. In such cases an increase in the
interest rate, according to the formula, increases the amount of each payment to keep the
value of the future cash flows unchanged.
There are several well-known types of lending interest rates: discount rate, prime rate and
consumer rates for autos or mortgages.
The discount rate is the rate that the Federal Reserve Bank (the central bank of the United
States) charges to banks and other financial institutions to borrow short-term funds directly
from the central bank. The discount rate affects the rates these financial institutions then
charge to their customers.
The prime interest rate is the rate charged by banks and large commercial institutions to their
most creditworthy customers which typically are large and well established businesses. Most
major banks have very similar prime interest rate and they
adjust it at the same time. This rate is based on the federal funds rate, which is charged by
banks to other banks needing overnight loans to meet reserve requirements. The federal fund
rate is one of the most sensitive indicators of the direction of interest rates since it is set daily
by the market. The prime rate is the most widely used benchmark in setting home equity
lines of credit and credit card rates.
Consumer interest rates represent the rates at which banks and other financial institutions
lend funds to individuals like you and me. Amongst other things consumer rates encompass
such familiar things as mortgage rates, auto loan rates,
credit card rates etc. Consumer interest rates are in large degree determined by the prime
rates. While the prime rate is not available to consumers, some consumer loans such as
mortgage lines of credit are priced at prime rate + 2%; that is, a consumer will pay 2 percent
over the prime rate to borrow money.
When the Federal Reserve raises the discount rate, typically banks raise the prime rate, which
in turn causes consumer rates to go up resulting in people like me and you paying higher
interest rates on our debt.
In our everyday life we keep hearing interest this, interest that. But how many of us ever
thought about what interest is? From a borrower’s perspective interest is the difference
between the amount of money borrowed and the amount of money
repaid. While repaying the debt a borrower incurs so called interest expense. On the other
hand, the money landing party earns interest revenue. Thus, in any particular lending
situation interest revenue equals interest expense. The formula used to calculate the amount
of interest is as follows:
Interest = Principal * InterestRate * Duration
where:
Principal - amount of money borrowed
InterestRate - percent paid or earned per year
Duration - number of years
For example when someone acquires a good or service and in exchange promises to make a
series of payments to the supplier he or she enters a transaction called annuity. An annuity is
a series of payments of equal amount separated by equal time intervals.
Lets consider borrowing transactions in which the present value of the future cash flows and
the transaction duration or the number of payments are fixed. A 30 year home mortgage or a
4 year car loan, for instance, are types of such transactions. In such cases an increase in the
interest rate, according to the formula, increases the amount of each payment to keep the
value of the future cash flows unchanged.
There are several well-known types of lending interest rates: discount rate, prime rate and
consumer rates for autos or mortgages.
The discount rate is the rate that the Federal Reserve Bank (the central bank of the United
States) charges to banks and other financial institutions to borrow short-term funds directly
from the central bank. The discount rate affects the rates these financial institutions then
charge to their customers.
The prime interest rate is the rate charged by banks and large commercial institutions to their
most creditworthy customers which typically are large and well established businesses. Most
major banks have very similar prime interest rate and they
adjust it at the same time. This rate is based on the federal funds rate, which is charged by
banks to other banks needing overnight loans to meet reserve requirements. The federal fund
rate is one of the most sensitive indicators of the direction of interest rates since it is set daily
by the market. The prime rate is the most widely used benchmark in setting home equity
lines of credit and credit card rates.
Consumer interest rates represent the rates at which banks and other financial institutions
lend funds to individuals like you and me. Amongst other things consumer rates encompass
such familiar things as mortgage rates, auto loan rates,
credit card rates etc. Consumer interest rates are in large degree determined by the prime
rates. While the prime rate is not available to consumers, some consumer loans such as
mortgage lines of credit are priced at prime rate + 2%; that is, a consumer will pay 2 percent
over the prime rate to borrow money.
When the Federal Reserve raises the discount rate, typically banks raise the prime rate, which
in turn causes consumer rates to go up resulting in people like me and you paying higher
interest rates on our debt.
| Fast Cash Business Solutions! |
Average Loan Rate for SBA Loans
The loan rate for small businesses is based on the market rate for loans and is fundamentally related
to the long-term federal borrowing rate. In early 2011, this long-term rate was at a low of about 4
percent, versus a 7.5 percent historical average. Due to the riskiness of small business loans, their
rate is always several points above the long-term rate. According to the Federal Reserve, the
average in early 2011 for small business loans was 8.4 percent for loans less than $100,000 and 7.6
percent for loans between $100,000 and $1 million.
Source: The Average Interest Rate for Small Business Loans | eHow.com
The loan rate for small businesses is based on the market rate for loans and is fundamentally related
to the long-term federal borrowing rate. In early 2011, this long-term rate was at a low of about 4
percent, versus a 7.5 percent historical average. Due to the riskiness of small business loans, their
rate is always several points above the long-term rate. According to the Federal Reserve, the
average in early 2011 for small business loans was 8.4 percent for loans less than $100,000 and 7.6
percent for loans between $100,000 and $1 million.
Source: The Average Interest Rate for Small Business Loans | eHow.com
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