Introduction to Discount Loan Rate
If you want to estimate the investment value of any collateral then you can easily estimate its value by measuring it against the all available opportunities of investment to a specific investor because all investment opportunities will be exactly equal to investment value of the property or asset. The investors will always demand high returns to invest in the assets which are illiquid as compared to the investment returns on the government treasuries and the rate of return demanded by the investor on the illiquid assets is known as discount rate and if a loan provider is demanding return on its money then it is called loan rate and in this article we will discuss about discount loan rate.
It is important to note that loan rate will be different for different loan offers such as some loan providers and financing companies charge high loan rate, while other charge low loan rate but your loan rate will be determined according to your loan amount and your financial situation. If you are applying for payday loan then for short repayment time period then loan rate will not be high but if you will apply for high amounts of loans then loan rate will be determined according to your income level.
Loan Rates and Interest Rates are not similar
It is also important to note that discount loan rate is different from the interest rate because some people consider that loan rate and interest rate are same but there consideration is totally wrong because interest rate is the fixed amount which you have to pay with each instalment of loans monthly. On the other hand, loan rate is not a fixed amount and you can negotiate about it with your loan provider; therefore, it can be high or low and sometimes loan providers offer loan polices without any loan rate.
The discount loan rate also depends upon the investment value of the property such as if you are applying for secured loans then you will have to plane any collateral against these loans; if the value of your collateral is very high as compared to your loan then loan rate will be not high. The people who are getting unsecured loans will have to pay the high loan rate but they can get discount if they will repay the loan before the end of loan contract but this discount will not be given in the form of loan rate but this discount will be given in the form of low interest rate.
It is also important to note that you can also get loans with discount loan rate if you will get the unsecured loans for short period of time because long term loans offers have greater loan rate with greater interest rate. It is also important to note that amount of instalment also helpful to determine low or high loan rate such as if monthly instalment is high then loan rate will be low and in case of low monthly instalments it will be high.