Margin

The margin is one of the factors used to calculate the rate of interest on a loan with an adjustable rate. Lenders add the margin on to whatever indexed rate is being used as the basis for the loan. Margin is expressed as a percentage and each lender can choose any amount as its margin. When obtaining a loan, it’s important to know what the lender is using as its margin because an increase of just one percentage point can considerably increase the total cost of the loan and the amount that is paid at each payment interval. If the margin is high, try another lender.