Patrick Guitman recently graduated from college with $20,000 in student loans and $5,000 in credit card debt.He usually makes minimum payments on his debt and he has been late with three payments in the last year.He wants to buy a new car but was told that his interest rate on a loan would be very high.What is the most likely reason this might be so?

Question

Quizplus · Accepted Answer

The most likely reason for Patrick to receive a high interest rate on a car loan is due to his poor credit rating caused by his history of late payments on his debt. Lenders will consider this behavior as risky and may charge higher interest rates to offset the perceived risk. A is incorrect because the general interest rates may not be relevant to an individual's creditworthiness. C and D are incorrect because having an outstanding student loan or exceeding a certain amount of debt is unlikely to affect the interest rate on a car loan. E is incorrect because interest rates on car loans are not directly tied to the CPI.

Patrick Guitman Recently Graduated from College with $20,000 in Student