Question

Variable rate loans typically have a 1)________ interest rate than fixed rate loans because with variable rate loans, the borrower assumes the risk that the interest rate might 2)_________. Lower, Decrease Lower, Increase Higher, Increase Higher, Decrease

Answer 1

Lower, Increase

Explanation:

Variable rate loans are usually associated with lower interest rates.

However, unlike fixed rate loans, variable rate loans change as interest rates change.

If interest rates go up, your interest rate on your loan will go up as well.

Answer 2

Answers

1. Lower

2. Increase

Variable rate loans typically have a lower interest rate than fixed rate loans because with variable rate loans, the borrower assumes the risk that the interest rate might increase. As compared with fixed rate loans, the starting interest rates of variable rate loans are lower, the risk however, is that the interest rate may increase over time.