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Detailed explanation-1: -Which institutions charge the highest interest rates on loans? pawnshops, payday lenders, tax prepares, finance companies. What are the advantages of a credit union? At a credit union, credit cards, home equity loans, mortgages, auto loans, and personal loans all enjoy lower rates than you will find at a bank.

Detailed explanation-2: -A high-interest loan has an annual percentage rate above 36%, the highest APR that most consumer advocates consider affordable. High-interest loans are offered by online and storefront lenders that promise fast funding and easy applications, sometimes without checking your credit.

Detailed explanation-3: -If the borrower is considered high risk, the interest rate that they are charged will be higher, which results in a higher cost loan. Risk is typically assessed when a lender looks at a potential borrower’s credit score, which is why it’s important to have an excellent one if you want to qualify for the best loans.

Detailed explanation-4: -In contrast, if an applicant has a poor credit history, they may have to work with a subprime lender-a mortgage lender that offers loans with relatively high-interest rates to high-risk borrowers-to obtain financing.