A variable interest rate, moving up and down on the basis of the market interest rate, which is fixed on an ongoing basis by NationalBanken. The market rate reflects supply and demand in the market. This means that NationalBank finds out what interest rates the Danish banks are willing to lend their money to and what consumers are willing to pay in interest to create a loan.
The benefit of a variable interest rate
- It may fall under your loan
- It is often set lower than a fixed interest rate at the start date of the loan
The disadvantages of a variable interest rate
- It may increase during the term of your loan
- You can worry too much about whether interest rates are constantly rising or falling
The opposite of the variable rate is a fixed rate. Here, the interest rate is set from the loan start date. After that, you must repay the loan with a fixed monthly payment. This means that interest rates on the loan can neither rise nor fall. If you are unsure which of the two types of interest is best for you, you can see the advantages and disadvantages of the two types below.
The benefit of a fixed interest rate
- It cannot increase during the term of your loan
- Don’t worry if interest rates rise or fall
The disadvantages of a fixed interest rate
- It is often higher than the market rate at the start of the loan date0
- The market interest rate may fall, and then you will have to pay more than you would with a variable rate
What does interest on a loan mean?
Interest is a small percentage amount, of the total amount you borrowed. No matter if you borrow money from a traditional bank like a bank. Or an unconventional financial institution like an online loan provider, there will be interest on the loan that you get.
Interest is thus a fee calculated in percentages of the full amount borrowed. Thus, when you repay the loaned amount, you must repay the full amount plus the calculated percentage – ie the interest rate. When borrowing money, it is important to be aware of the interest rate you are borrowing. That knowledge is crucial to how much money you have to pay back in addition to the original amount you borrowed.
Example of interest
It may sound a little complicated in writing, so you just get an example of interest here. Imagine that you have borrowed 4,000 kroner. You have borrowed NOK 4,000 and the interest rate is 10% per annum. If it only takes you one year to pay back the 4,000 kroner, your loan will look like this.
4,000 kroner * 1,10 = 4,400 kroner
This year, therefore, the interest rate amounts to DKK 400 after one year. If, on the other hand, it takes you two years to repay the loan, you end up having to pay £ 400 more for the loan – and you have to pay a total of £ 4800 back to the lender. You see here how your borrowing costs increase over time. However, when you take out a loan online, there is a significantly shorter repayment period than one year. Therefore, it is a good idea that you both investigate loan options and know what amount you need to borrow.
What types of interest rates does Cane Mariles have?
When you borrow money from Cane Mariles, you borrow at a fixed interest rate. When you borrow from us, you borrow money for a short period of time. Therefore, the market rate does not have much impact on your loan with us. We mostly assume that you do not borrow more money than you can repay them to us within the term of the loan.
Get a loan that’s right for you
At Cane Mariles we assess you and then we find the most suitable loan, so you can not borrow too much. You can borrow between 3,000 and 20,000 kroner and get the money paid right away. Through our instant transfer, we have the option of paying off the loan for all 7 days of the week.