Why Interest Rates Are Different For Different Kinds of Loans

In this essay I will be explaining why interest rates are different for different types of loans. The types of loans I will be discussing are, car loans, house loans(mortgage), medical loans, and student loans.

Car Loans VS House Loans

Car loans have higher interest rates then house loans since cars lose value much more quickly than houses. Cars break down often, and eventually even shut down. Houses on the other hand last much longer. Even though there will be some issues over the years with a house when it comes to repairs, a house still lasts much longer than a car and a houses value does not go down that easily. When you drive a car from the car dealer the day you buy it, its value will go down by a pretty large percentage. So it makes sense why car loans have higher interest rates then house loans or mortgages.

Medical Loans VS Student Loans

Interest rates for medical loans are on the rise but they are still lower but most student loan interest rates are higher, this is because most people don’t really get a medical loan unless something horrible like a life threatening illness or injury befalls someone, that is usually when a medical loan is used. 

On the other hand many people have to get a student loan when enrolling to a college or university since most universities and colleges are incredibly expensive. This makes the interest rate higher. So it makes sense why medical loans interest rates are lower than student loans. Since medical loans are used less often but student loans are used all the time.

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