Why might a bank offer to make a loan to a customer at a low initial rate that will increase after a set period of time?

To fool the customer into making an unmanageable commitment

To make the loan look more attractive and competitive in the long run

To make the loan look more attractive and competitive now

The bank accepts making less money in the later years of the loan

Question

Business

Jayda Rios

23 September, 08:18

Why might a bank offer to make a loan to a customer at a low initial rate that will increase after a set period of time?

To fool the customer into making an unmanageable commitment

To make the loan look more attractive and competitive in the long run

To make the loan look more attractive and competitive now

The bank accepts making less money in the later years of the loan

+3

Answers (2)

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Dania Waters · Answer 1

Why might a bank offer to make a loan to a customer at a low initial rate that will increase after a set period of time?

To make the loan look more attractive and competitive now.

When you apply for a loan, it's important to look at the terms and conditions. Just because the interest is low at the beginning, if not paid off quicker than the full term, it may go up increasing the amount being paid in interest over principle. When a bank offers a low initial interest rate, it's very attractive for a consumer who really needs to the loan to take it almost forgetting or being blind to the fact it will increase astronomically and basically even out to a set rate that's higher from the beginning.

Keagan Hale · Answer 2

To make the loan look more attractive and competitive now