The Importance of Understanding Periodic Rate
What is the periodic rate and why is it important to understand?
1. Is the periodic rate an interest rate that changes over the term of the loan?
2. Is the periodic rate the interest rate you are charged for one payment period?
3. Is the periodic rate the APR multiplied by twelve?
4. Is the periodic rate the amount of time you have to pay your loan?
Answer:
The periodic rate refers to the interest you are charged for one payment period.
Explanation:
The periodic rate is a crucial concept to grasp when it comes to loans and borrowing. It represents the interest rate that applies to each payment period of a loan. Understanding the periodic rate is important because it directly impacts the amount of interest you will pay over the term of the loan. By knowing the periodic rate, borrowers can make informed decisions about the affordability and terms of a loan.