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The lower interest rate is always preferred because interest is the amount you pay for borrowing money. In either case, you'll have to pay back the principle, so it amounts to a cost of money borrowed issue. By opting for a lower periodic payment, you are spending more to borrow the same money. Not the best option unless you are the lender.

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โˆ™ 2006-03-27 17:30:01
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Q: What is preferable a loan with lower interest present value or a loan with a lower periodic?
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Is a loan with a lower present value preferable to a loan with a lower periodic installment?

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Is a loan with a lower present value or a loan with a lower periodic installment preferable?

All things being equal, a loan with lower present value is preferred to a loan with lower periodic installment. Simply because you are paying a lower interest. A present value of a loan is determined by 1) amount of loan 2) interest rate 3) number of payment frequency such as monthly, weekly, and etc 4) the size of each periodic payment 5) time of the loan So if 1,3, and 5 remain the same and only 2 and 4 can change, then the relationship is of 2 and 4 is positively correlated. That is the higher the interest rate the higher the size of periodic payment.

What is preferable a loan with a lower present value or a loan with a lower periodic installments?

loan with lower present value means higher tenure of repayment & because of this higher tenure its present value factor increases and its present value gets reduced. on the other hand loan with lower periodic installments means again you are making repayments over longer period of time. so as far as my knowledge is concerned, both are same

What element is large on the periodic table?

Cesium is largest element on the periodic table.The atomic radius of Cs is around 273pm. It is present at the lower left corner of the table.

When Calculating Present value is the interest rate higher or lower if the present value amount is smaller?

Well normally it depends on how much people buy them.

Which is preferable a loan with a lower present value or a loan with a lower periodic installment and why?

The answer is it depends. Assuming that the way that you get the present value of the loan is by applying a discount rate to the payment stream to both loans, the obvious answer would be that the desirable one is the one with the lowest present value. However, things are not so simple. You also have to take into consideration the impact on your cash flow. The following thoughts will give you an idea of where I am coming from. - By paying a lower payment, you will have extra cash available to invest. - What kind of return can you make on this extra cash? - This is the main reason why borrowers want longer maturities.

Why do the factors in the present value table never reach 1.00?

Everything is lower than one dollar because you taking the interest out when you are calculating the present value.

What is sub-prime rate of interest?

It is one kind of interest rate lower than themarket interest rate for a target group. This type of interest rate was used in USA house mortgage loan to capture all the lower income people. This is the one significant cause of present economic crisis.

Present value of the dollar?

8-9 cents Increases with lower interest rates and decreases with longer periods of time.

What is better a higher or a lower percentage?

If you are receiving interest on an assett, a higher interest is better. If you are paying interest on a debit, a lower interest is better.

Where is the electronegativity the lowest on the periodic table?

Lower Left corner of the periodic table

Where are the heaviest elements on the periodic table?

At the lower right corner of the Periodic Table.

Where are the heaviest elements located on the periodic table?

At the lower right corner of the periodic table.

Why is there a space in the lower periods on the periodic table?

they are artificially made elements added to the periodic table

Would a short term monetary policy take most action in lower interest rates?

lower interest rates

More frequent compounding results in higher future values and lower present values than less frequent compounding at the same interest rate?


When is normal interest rate lower then effective interest?

Only on Tuesdays.

What is the daily carb intake allowance for a 2000 calorie diet?

Up to 200 grams. But lower is preferable.

How do people acquire building loans at lower interest rates?

People can get loans to purchase buildings with lower interest rates by shopping around for a good bank. You can also get lower interest rates by having good credit.

What does P stands for in periodic table?

P (not lower case p) in the periodic table stands for PHOSPHOROUS

How can you reduce interest on high interest loan?

Repay the loan with the funds raised from a lower interest loan.

How can you escape your high interest contract?

try to get a lower interest loan and pay off the higher interest contract.

What are the least eletronegative elements in the periodic table?

The metals in the lower left corner of the periodic table are the least electronegative.

How interest rate affect the value of us dollar?

its actually the other way around. the value of the us dollar effects interest rates. the lower the us dollar is worth, the lower the interest rate

How can one lower your interest rates?

Some tips for lowering interest rates are these: pay the credit cards off in increments. By using payments on time it should lower the bill and interest rates quicker.