Risk is THE biggest factor in interest rates. If it was all timevalue we'd be paying interest closer to inflation rates. Put yourself in the shoes of a lender.

Risk is THE biggest factor in interest rates. If it was all timevalue we'd be paying interest closer to inflation rates. Put yourself in the shoes of a lender. On one hand is a doctor, $300k salary, looking to borrow $30k for a new boat. 780 fico. On the other is Trevor, a bartender who makes $25k a year, has a 680 fico with some late payments and a cable bill collection from 2 years ago and wants $30k for a new car. Would you lend to them both at the same rate? Both will have the same time value effects....