When we explore the process of loans for the purchase of real estate and cars, the difference in interest on loans will attract our attention. This article responds to the question as to why interest on real estate loans is usually lower than on automobile loans and is further analysed and answered。

Why is the interest on the mortgage lower than on the car

First, let's look at the profitability of bank products. There are different profit margins for banks to operate on different loan products. In the case of real estate loans, for example, the profits are derived mainly from interest charged and the profits are relatively small. In contrast, car loans often involve additional costs, such as vehicle insurance, compensation and mortgages, making their profitability relatively high。

Second, risk assessment of loans is an important factor. In the bank ' s credit operations, real estate loans are considered less risky. This is due to the relatively stable value of the property as collateral, which, in case of default, can also be used by banks to redeem principal and interest. However, the risk of car loans is greater. Prices are more volatile because they are affected by factors such as use and maintenance。

Moreover, the duration of the loan may also have an impact. The duration of a real estate loan usually lasts between 5 and 30 years, and such a long-term loan can bring a stable cash flow of interest to the bank and help it to withstand inflation risks. On the other hand, the duration of the car loan is relatively short, usually between 2 and 5 years, and in order to secure profits, banks will choose a higher loan rate。

First, you can try to increase the down payment rate. Generally, the higher the down payment rate, the lower your loan, the lower the bank's risk to your loan, which may give you a lower interest rate. Second, it is more "contributive" to banks, such as using your credit cards, or putting money into banks' funds, buying large deposits, etc., that a bank's high-quality customers may enjoy lower interest rates. Finally, as much as possible, good credit records will make you more attractive, and thus at lower interest rates。