See Also:
What is Compound Interest
Effective Rate of Interest Calculation
Interest Expense
Nominal Interest Rate
Interest Rate SwapsFirst off,
the interest rate is always important. It determines the size of your loan payments.
There are, however, other considerations which may lead a borrower to not select the loan with the lowest interest rate.
FlexibilityA lender who is willing to structure the terms of a loan more favorably from the borrower’s perspective may be offering a more attractive deal than a competing loan with a lower interest rate and more stringent terms.
ExperienceA banker who understands the nuances of your company’s industry and has contacts within the industry may make a loan at a higher interest rate worth it. In addition, if you are considering a potential sale of your business a lender experienced in such transactions may make for a much smoother transaction.
TurnaroundOften it is crucial to have expedited access to borrowed funds. A lender who can process your loan within a short period of time may be your best option.
RelationshipDoes the prospective lender have a significant interest in obtaining your business due to their size or their desire to enter a new industry? This may afford you the opportunity to establish a relationship and eventually obtain more favorable terms, including a lower interest rate in the future for your borrowing needs.