which of the following is a benefit of fixed interest rates for borrowers?
a. fixed interest rates are initially lower than variable interest rates
b. fixed interest rates are as easy for borrowers to budget as variable interest rates
c.fixed interest rates are easier for borrowers to budget than variable interest rates
d.fixed interest rates are more likely to decrease and save borrowers money than variable interest rates
c. fixed interest rates are easier for borrowers to budget than variable interest rates
The correct answer is c. Fixed interest rates are easier for borrowers to budget than variable interest rates.
To determine the correct answer, let's analyze each option:
a. Fixed interest rates are initially lower than variable interest rates: This statement suggests that fixed interest rates are lower than variable interest rates at the beginning. However, this statement is not always true. Interest rates, whether fixed or variable, are determined based on a range of factors, including market conditions, lender policies, and borrower qualifications. So, this statement is not a definitive benefit of fixed interest rates.
b. Fixed interest rates are as easy for borrowers to budget as variable interest rates: This option suggests that both fixed and variable interest rates are equally easy to budget for borrowers. While this may be true for some borrowers, the benefit of fixed interest rates is usually that they remain the same over the life of the loan, making it easier for borrowers to plan their finances without worrying about fluctuations in interest rates.
c. Fixed interest rates are easier for borrowers to budget than variable interest rates: This option is similar to the previous one but emphasizes that fixed interest rates are easier for borrowers to budget than variable interest rates. This is typically true because borrowers know exactly what their monthly payments will be throughout the loan term, allowing for better financial planning and budgeting.
d. Fixed interest rates are more likely to decrease and save borrowers money than variable interest rates: This statement suggests that fixed interest rates are more likely to decrease over time, resulting in potential savings for borrowers compared to variable interest rates. However, it is important to note that fixed interest rates do not change unless refinanced, while variable interest rates can fluctuate based on market conditions. Therefore, variable interest rates may have the potential to decrease and save borrowers money in certain scenarios.
Based on the analysis, the correct answer is option c: Fixed interest rates are easier for borrowers to budget than variable interest rates.