Types of loans Flashcards
(5 cards)
1
Q
Fixed interest
A
The interest rate payable remains the same for the period of the loan.
Advantage:
- Greater security because the money will never decrease
Disadvantage:
- Less flexibility with total amount
- No benefit if there are rate cuts
2
Q
Variable interest
A
The interest rate payable varies depending on the financial market.
Advantages:
- Rate flexibility
- Easier to refinance
Disadvantages:
- Cash flow uncertainty
3
Q
Employer contributions
A
Your employer pays 11.5% of your pay to your super account
4
Q
Investment growth
A
Money in your super fund is invested into various assets helping it grow over time.
5
Q
Compound interest
A
When money is invested and earns interest, overtime, interest will be earnt on past interest.
