Elijah has an opportunity to study abroad, but this will cost $5000 more than his regular college tuition. He wants to have a career in international finance when he graduates, so this opportunity will be particularly valuable for his career. His parents encourage him to go and tell him that they will help pay back the loan next year when they are done paying his brother's college tuition. What kind of loan should Elijah get?

Question

Elijah has an opportunity to study abroad, but this will cost $5000 more than his regular college tuition. He wants to have a career in international finance when he graduates, so this opportunity will be particularly valuable for his career. His parents encourage him to go and tell him that they will help pay back the loan next year when they are done paying his brother's college tuition. What kind of loan should Elijah get?

• a loan with a very high APR
• a government bond or treasury bill
• a secured loan since the trip is collateral
• an unsecured loan since there is no collateral

Answer 1

An unsecured loan would be the best option for Elijah in this situation since there is no collateral required. This type of loan will allow him to borrow the money he needs for the study abroad program without having to put up any assets as security. Additionally, since his parents have offered to help pay back the loan, it may not be necessary for Elijah to secure the loan with collateral. This will give him the flexibility to pursue his career goals without risking any of his personal assets.