| | P | Prevailing Interest Rate |
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| What is Prevailing Interest Rate?
Prevailing Interest Rate is a rate which determines all the other rates used in finance. This rate changes on a monthly bases and is set by the countries monetary authorities. Creditors determine the rate what they are paying for the persons make deposit and also the interest what they ask from the persons who borrow money from them, they set this rates by taking in consideration the Prevailing Interest Rate.
The monetary sit down each month and decide what will be the Prevailing Interest Rate for the next term. After this is decided the banks and all creditors will set their rates using as reference the previously mentioned one. For example there's the base rate which is also determined by the Prevailing Interest Rate, now whenever the government or the local authorities ask for a loan they get the best rate, this could be low as 0.5% higher then the base rate, companies which are well established and they have an excellent credit history they can get a loan with the interest rate low as 1.0% higher then the base rate, and of course there are the common folk and the small companies who can ask for credit as low as 5-6% of the base loan. So it's easy to see that how important the Prevailing Interest Rate is because it determines many other rates. | | | | |
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