Since the future holds more uncertainty over longer periods of time, lenders generally want a:
A) higher interest rate for loans over a longer period.
B) lower interest rate for loans over a longer period.
C) higher interest rate for loans over a shorter period.
D) constant interest rate for loans over the period of the loan.

Question

Quizplus · Accepted Answer

Lenders want to be compensated for the additional risk of uncertainty over longer periods of time, so they generally charge a higher interest rate for loans with longer repayment periods. This is because the longer the loan period, the greater the chance of something going wrong during that time that could affect the borrower's ability to repay the loan.

Since the Future Holds More Uncertainty Over Longer Periods of Time