How is the interest rate on a loan fixed?

The interest rate that is charged on the loan is based on the capital that is actually borrowed.

Sometimes a bigger or smaller borrowing could have different rates of interest charged on it,

The time for which the loan is being taken is also a factor that determines the interest rate

The purpose for which the loan is being taken impact the interest rate. If there is no security backing the loan than the interest rate would be higher.

The interest rate also depends on the financial history of the person taking the loan.

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