Question

what do lenders look for when deciding if they want to give you a loan?
what is a fixed rate loan?
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what is a variable rate loan?
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what is an index?

Explanation:

1. What do lenders look for when deciding if they want to give you a loan?

Lenders assess creditworthiness: credit score (history of repaying debts), income (ability to repay), debt - to - income ratio (how much debt relative to income), employment stability, and collateral (for secured loans) to decide loan approval.

A fixed rate loan has an interest rate that stays the same throughout the loan term. So, the monthly payment (for amortizing loans) or the interest portion of the payment remains constant, making it easy to budget as the cost of borrowing is predictable.

A variable rate loan has an interest rate that changes over time, usually tied to an index (like the prime rate). The rate (and often the monthly payment) fluctuates with market conditions or the index, so the cost of borrowing can increase or decrease.

Answer:

Lenders look at credit score, income, debt - to - income ratio, employment stability, and collateral (for secured loans) to decide loan approval.

2. What is a fixed rate loan?