Which of the following loans will typically offer the lowest interest rate

The option (c) is correct.

Mortgage loan offers the lowest interest rate.

Further explanation:

Mortgage loan:

Mortgage loan is a type of loan where the asset is used as a collateraland then the loan is disbursed. Mortgage payment remains constant. The issuer of the loan specifies the amount of the mortgage payment and the time interval of the payment. So the amount of mortgage payment remains same for all the installments. The loan is secured by the asset therefore, there is very low risk as the asset can be used in case of default. The low risk nature of the mortgage loan results in the low-interest rate.

Therefore, mortgage loans have a low rate of interest.

Justification for the correct and incorrect options:

a.

Payday loan: This is an incorrect option.

Payday loan has the highest rate of interest.

b.

Car loan: This is an incorrect option.

Car loan has the higher interest rate than mortgage loan,

c.

Mortgage loan: This is the correct option.

Mortgage loans are guaranteed by assets therefore, has the lowest rate of interest.

d.

Credit card: This is an incorrect option.

Credit card charges a high rate of interest on the amount borrowed.

Learn more:

1.Learn more about the collateral loans

2.Learn more about loaning the money

3.Learn more about the mortgage payment

Answer details  

Grade: Senior School

Subject: Business Studies

Chapter: Bonds & Debentures

Keywords: loans, typically, offer, lowest, interest rate, payday loan, car, loan, mortgage, credit card.

Student loans, which are given to those in college by the federal government, are most commonly known as the loans with the small interest rates. These loans are fixed rates and will not increase overtime, they just accumulate monthly untilt he loans are paid off.

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