Question

Samantha has a loan with an interest rate of 6.67 percent now, but the rate could increase 2 percent next year. What lending term best describes this loan?
1)finance charges
2)fixed rate loan
3)APR
3)variable rate loan

Answer 1

Answer: 3 Variable Rate Loan.

The variable rate loan best describes the loan agreement because the rate can vary and become a different percent over the course of the loan agreement. When you agree to loan terms with variable interest rates it is important to remember when they will change and check the interest rate amounts at any given time over the course of the loan, sometimes the loan terms jump drastically if not paid by the initial given rate.

Answer 2

Based on the given description above, the correct answer would be option 4. If Samantha has a loan with an interest rate of 6.67 percent now and it could increase at 2 percent next year, this lending term is called the variable rate loan. This kind of loan has an interest that varies as market interest rates change. Hope this helps.