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What type of loan changes over time depending upon the market?

A. Term loan
B. Variable-rate loan
C. Fixed-rate loan

Sagot :

GinnyAnsweridn

Final answer:

An adjustable-rate loan changes with market interest rates, offering potential initial lower rates compared to fixed-rate loans.


Explanation:

An adjustable-rate loan changes over time depending on the market interest rates. Unlike a fixed-rate loan where the interest rate remains constant throughout the loan term, an adjustable-rate loan's interest rate fluctuates with the market conditions.

For example, an adjustable-rate mortgage (ARM) is a type of loan where the interest rate can vary based on the rate of inflation, providing borrowers with the potential for lower initial interest rates compared to fixed-rate loans.

Loans with built-in inflation adjustments are common in adjustable-rate loans, which means that if inflation rates rise or fall, the interest rates on the loan would adjust accordingly.


Learn more about Types of loans here:

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