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 Patrick would face a high interest rate on a car loan is a poor credit rating resulting from his late payments and high debt-to-income ratio. General interest rates, the existence of a student loan, and recent graduate status are unlikely to have a significant impact on his car loan interest rate. Interest rates may be influenced by the CPI, but this is not the most likely factor affecting Patrick's situation.

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