Loans that are secured against an asset:
A) generally have lower interest rates.
B) generally have higher interest rates.
C) are much longer in length than unsecured loans.
D) are much shorter in length than unsecured loans.

Question

Quizplus · Accepted Answer

Loans that are secured against an asset, such as a car or a house, are considered less risky for lenders as they have an asset to repossess in case of default. As a result, lenders often offer lower interest rates on these types of loans. Therefore, choice A is correct. Choices C and D are incorrect as the length of a loan is not solely determined by whether it is secured or unsecured, but also by other factors such as the amount borrowed and the borrower's creditworthiness.

Loans That Are Secured Against an Asset