Write two paragraphs (approximately 200 words) about how interest rates affect our purchasing decisions. Answer: Interest rates is the price that the lender sets for the borrower to pay as a fee to borrow money. Depending on whether or not interest rates are high or low, you may or may not qualify for a specific loan. When interest rates are higher, we as an economy have less money, and most people save for what they want to purchase rather than finance. When interest rates are higher, less people qualify for vehicle and home loans.
Very low interest rates tempt more people to get into debt, as more people qualify for the same loans. Overall, most people agree that it is ridiculous to pay outrageous interest rates, understanding that saving and paying cash later is more better. Whenever interest rates go up in the marketplace buy ? percent, it is said that over 100,000 buyers will be eliminated from qualifying for a loan. Interest rate alone controls who, and who does not go into debt. So financing is usually a supply on demand cycle.
Home buyers will find that when interest rates are down, value in homes go up, and when interest rates are up, home value either stays the same or go down. It seems like to me that if you work hard on raising your credit score, and you don’t finance what you don’t have too, it would be more profitable to buy a home when others cannot afford to because of inflation. Unfortunately, those who are trapped in the rat-race of credit will suffer more consequences either way around. Those type of people get finance crazy when interest rates are low, and then cannot afford to keep up when they rise.