Final answer:
Secured loans typically have a lower interest rate compared to unsecured loans, due to the presence of collateral. A borrower's credit history and current economic interest rates can also affect loan costs and interest rates.
Step-by-step explanation:
The interest rate on secured loans is generally lower than the interest rate charged on unsecured loans. This is because secured loans are backed by collateral, which reduces the lender's risk if the borrower defaults on the loan. In contrast, unsecured loans do not have this backing, so the lender charges a higher interest rate to compensate for the increased risk.
Factors that can influence how much you would pay for a loan include the borrower's creditworthiness and the general condition of the economy's interest rates. For instance, a borrower with a poor repayment history is seen as more risky, and as a result, they might be charged a higher interest rate to offset the risk of default. Similarly, if interest rates in the economy have risen, a fixed-rate loan agreed upon at lower interest rates becomes less appealing, and its market value would decrease.