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22 July, 08:39

How do credit companies or banks earn a profit when they loan money?

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  1. 22 July, 11:47
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    Through interest rates

    Explanation:

    When a bank loan you a certain amount of money, the amount of money that you should pay back will be higher than the amount of money you borrow from the bank.

    The difference between the amount that you borrow and the amount you should pay is what usually referred to as Interest.

    The amount of interest rates that the bank give usually really depended on your credit score. But on average, a bank will provide you with around 5.5% interest rate for your loan.
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