Banks calculate interest rate using a combination of factors. The Federal Reserve chairman sets the national prime interest rate, which banks use as the base for the interest they charge. From the prime interest rate, banks adjust your interest rate after considering the risk involved in lending you money. Banks factor in you credit score and your debt-to-income ratio to access risk.

Interest rates also have different terms. With a fixed interest rate, the rate remains the same percent over the life of the loan. In an adjustable interest rate, the bank changes the interest rate based on the prime interest rate. If the prime rate increases, the percent of interest you pay increases. In most cases, a fixed rate saves you more money and protects you from an increase in your monthly payment. In addition to your credit score and debt-to-income ratio, the purpose of the loan also determines the average interest rate banks charge.

1. Mortgage interest rates are specific to purchasing or refinancing a home.

2. Auto interest rates are solely for purchasing a car.

3. Personal loan interest rates are for such expenses as home improvement or weddings.

Action Steps
The best contacts and resources to help you get it done

Compare interest rates for home loans from banks

Bank interest rates for home purchases can vary significantly; a seemingly small quarter-point difference on a home interest rate (5% to 5.25%) for a $200,000 loan over 30 years can mean an $11,000 difference in the total payoff. Banks typically offer a 30-year fixed interest rate or an ajustable rate mortgage (ARM).

I recommend: Get mortgage rates from JPMorgan Chase & Co.'s website. Because Chase has offices nationwide, you can speak face-to-face with a loan professional once you have your information. If you're comfortable with online-only shopping, LendingTree, LLC gets banks to compete for your business.

Get the best loan interest rate for an auto purchase

The average interest rate for a car purchase is typically greater than the interest rate for a home purchase. Car loans typically last 5 years, which means banks need a higher interest rate to make more from the purchase. Before signing the dealership's offer, know the best interest rates you qualify for and the terms you can get with your own lender. You have more options for where to get a car loan, since dealerships can always provide loans.

I recommend: Capital One Services, Inc. sells loans for new and used car purchases and loan refinancing. Autofinancequotes.com provides a way to get quotes from multiple brokers.

Compare secured and unsecured personal loan interest rates

Unsecured loans are often high-risk personal loans with variable interest rates because you offer no collateral, thus the bank cannot recover anything of value to sell in the case of a loan default. Credit cards are the most common example, but banks also offer such loans directly. Examples of a secured loan include home loans, secured by your home, and car loans, secured by your car.

I recommend: Citigroup Inc. sells unsecured and secured personal loans for up to $15,000 with terms ranging from 24-60 months. Bank of America Corporation offers secured and unsecured personal loans for debt consolidation, home improvement, healthcare financing and more.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Remember that interest rates fluctuate, so the current interest rate may not last long. If you conducted your search weeks ago, you should recheck the rates.