Question

What is the advantage of a variable-interest loan?

1. Reduces the total interest payments
2. Makes it easier for the borrower to plan for future payments
3. Protects the borrower from rising interest rates
4. Borrower can capitalize on a reference rate decrease​

Answer 1

Answer:

3 protects the borrower from rising interest rates.

Explanation:

if the underlying interest rate or index declines, the borrower's interest payments also fall. Conversely, if the underlying index rises, interest payments increase. Unlike variable interest rates, fixed interest rates do not fluctuate over its term.

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Answer 2

Answer:

3. Protects the borrower from rising interest rates

Explanation:

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