ECONOMICS
SAVING AND INVESTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Amortized mortgage
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Collateralized loan
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Secured loan
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Unsecured loan
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Detailed explanation-1: -Payday loans have high fees that can equate to annual percentage rates, or APRs, of around 400%-much higher than personal loan APRs, which average around 10% to 11% for a 24-month term, according to the Federal Reserve.
Detailed explanation-2: -Because unsecured loans are not backed by collateral, they are riskier for lenders. As a result, these loans typically come with higher interest rates.
Detailed explanation-3: -Because lenders take on more risk when loans aren’t backed by collateral, they might charge higher interest rates and require good or excellent credit. If a borrower stops making payments and defaults on the unsecured loan, there’s no collateral for the lender to take to recover the outstanding debt.
Detailed explanation-4: -The range of the interest rate on any unsecured loan is between 10.99% to 32%. The borrowers can get the best interest rate based on their credit profile, income, employment and age.