Why does the rate increase with monthly payments compared to annual payments when doing an amortizing advance?
Almost every customer who asks for amortizing advance rates for different payment frequencies has been concerned that the rate increases as the frequency increases, i.e., a monthly-payment amortizing advance with other characteristics identical to a semiannual-pay amortizing advance will show a slightly higher rate. On the surface this does appear to be contradictory, as one usually assumes that the faster you pay off a loan, the cheaper it will be. In the case of our amortizing advance advance, however, the rate very properly increases with payment frequency.
