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Evelyn has taken out a college loan. She needs to pay $500 every month for two years to repay the loan. What kind of loan does she have? Select one of the options below as your answer:

Aa fixed-rate loan
Ba variable-rate loan
Ca constant-rate loan

Verified Answer :

metchelle

Evelyn has taken out a colleage loan. She needs to pay five hundred dollars ($500) a month for the next two years to repay the loan. This type of loan is called the fixed-rate loan.
The interest rate does not fluctuate during the period of the loan.

The answer would be letter A.

Determination of type of loan:

In the given case Evelyn has taken out a college loan. She needs to pay $500 every month for two years to repay the loan. It means she has to pay the equal installment for the loan period and the interest amount is already determined by the bank. In other words we can say that there interest rate is already fixed.

A variable-rate loan is a type of loan under which the interest rate changes with the change in the bank rates and it also changes the interest and installment amount.


Hence the Correct option is:

A. a fixed-rate loan  



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