The specifics of a loan, such as interest rate, payment structure, and duration, can differ significantly from one to another. Which of these loans is likely to have the highest interest rate? Choose 1 answer: Choose 1 answer: (Choice A) credit card A credit card (Choice B) payday loan B payday loan (Choice C) mortgage C mortgage
Choice B) payday loan is likely to have the highest interest rate among the three options.
Choice B) payday loan
Payday loans typically have the highest interest rates among the options listed.
To determine which loan is likely to have the highest interest rate, we need to understand the characteristics of each loan option:
- Credit Card (Choice A): A credit card is a revolving line of credit typically associated with a higher interest rate compared to other loan types. However, the actual interest rate can vary depending on the creditworthiness of the borrower and market conditions.
- Payday Loan (Choice B): A payday loan is a short-term loan that is typically intended to be repaid in full on the borrower's next payday. These loans often come with high interest rates due to their quick and easy approval process and the short repayment period.
- Mortgage (Choice C): A mortgage is a long-term loan for purchasing or refinancing a home. Mortgages generally have lower interest rates compared to credit cards and payday loans because they are secured by collateral (the property being purchased).
Based on the characteristics mentioned, the loan most likely to have the highest interest rate is Choice B: payday loan. Payday loans are known for their high-interest rates due to the short-term nature of the loan and the quick access to funds with minimal borrower requirements. It's important to note that interest rates can vary depending on various factors like lender policies and local regulations, so it's always best to research and compare rates before making any borrowing decisions.