When people borrow to buy a home or car they often seek the prime rate. While many will receive a good rate, getting the prime rate is very unlikely because only the most creditworthy clients are offered this rate.
Technically, the prime rate (also called the prime lending rate or the prime interest rate) is a broad index among banks of a rate that most banks would levy when they loaned money to very trustworthy and reliable borrowers.
For example, the prime rate in the first quarter of 2010 was under 4% but most home buyers were lucky to receive a rate a point above at 4.75%. This is because most consumers have to access credit through a middle man, such as a mortgage broker.
The broker makes money by facilitating profitable loans and for him to operate, the bank has an overhead that includes office space, a computer, phone, and stacks of forms, making the prime rate out of reach for most.
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