We’re are often asked, “what will my interest rate be?” It would be great if we could answer immediately but different lenders look for different things, all of which influence the interest rate.
These are the 4 main factors considered in determining the interest rate. However, depending on the project, there could be several others in addition to these.
The type of loan will help determine interest rate!
Is it real estate, a capital infusion? Are you leasing/purchasing equipment? Is your business expanding? Could it be an SBA loan? The type of loan plays an important role in determining the interest rate.
The type of collateral
Do you have equipment? If so, how old is it?
Do you have real estate? If so, how is it being used: residential, business, etc.? If residential, is it income-producing? If a business, what kind of business and is it profitable?
How much capital do you have to invest in the project for which you want the loan?
The terms of the loan
How much do you want to borrow? Most lenders determine an interest rate based on the amount of money borrowed in concert with the other factors. recourse or non-recourse?
Is there a pre-payment penalty? Will the lender charge points? These all determine the true cost of the loan.
Can it cover the entire project or will you need to bridge this loan into another, longer loan?
The borrower
What is your credit history? A bad or low credit score does not necessarily mean you won’t get a loan but it will affect the interest rate.
Will anyone else be partnering with you on the loan? If so, what is their credit history, how much are they contributing to the project in way of capital, what is their role in the project?
A short discussion will help get the ball rolling.
“Let’s look at what you want to do and we’ll find a lender to help you.
They will decide your interest rate after considering all the factors involved.
It’s your decision whether you want to accept the terms.”
Give us a call and we’ll start the process!!