Which of the following would increase the interest rate for a loan?

Question

Quizplus · Accepted Answer

A poor credit rating is an indication that the borrower is a high-risk borrower and is more likely to default on the loan. To compensate for this higher risk, lenders charge a higher interest rate.

Note: B, C, D, and E are factors that can potentially lower the interest rate for a loan. A higher down payment reduces the lender's risk, lower inflation reduces the cost of borrowing for lenders, lower prices indicate a lower cost of living and therefore lower interest rates, and a shorter time to maturity means the lender's money is tied up for a shorter period and therefore less risky.

Which of the Following Would Increase the Interest Rate for a Loan