Larger loans, other things constant, have lower interest rates because

Question

Quizplus · Accepted Answer

The fixed costs associated with handling charges (such as administrative fees and processing costs) are generally lower as a percentage of the total loan amount for larger loans. This is because the same amount of work is required to process a small loan as a large loan, but the revenue generated from a small loan may not cover the fixed costs. As a result, lenders are willing to offer lower interest rates for larger loans in order to make the loan more attractive and encourage borrowers to take out larger loans.

Larger Loans, Other Things Constant, Have Lower Interest Rates Because