The interest rate (the additional amount that must be paid with a loan to pay for the service of the lender) can be greatly affected by both the collateral that is used to secure the loan and the credit history of the loan applicant.
Collateral is some piece of property that has value, which is used as a guarantee for repayment of a loan. The type of collateral that you use to guarantee a loan can have a large effect on the amount that you pay. Certain types of lenders, such as online lenders, tend to use specific types of collateral (such as home equity) so as to be able to offer lower rates, while others allow more types of collateral to be used for various interest rates.
It's possible to reduce interest rates significantly by using high-value collateral that can be easily valued by the lender.
Your credit history is a major determining factor in the amount that you'll pay for low cost loans… after all, if you've had credit problems in the past then there are a lot of lenders who might not trust you to repay the loan that they give you in decent time.
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