why might a bank offer to make a loan to a consumer at a low initial rate which will increase after a set period of time?

Question

17-04-2016
Business

contestada

why might a bank offer to make a loan to a consumer at a low initial rate which will increase after a set period of time?

Respuesta :

Otras preguntas

Hernando’s restaurant maintains its five-star rating by focusing on all aspects of service quality. When employees are trained to accurately answer questions ab

2. A car that starts from rest can travel a distance of 50 m in a time of 6.0 s. a. What is the final velocity of the car? b. What is the acceleration of the ca

a 30 year man sustains a left femoral fracture in a skiing accident, and his leg is placed in a cast. after several weeks of immobilization, you find that the l

Ms. dulaney teaches 7 classes a day. each class has 23 students. after school she coaches the girls track team. there are 47 students on the track team that do

It is estimated that ___ percentage of americans will meet the criteria for a diagnosable mental health condition sometime in their lifetime.

Eliza is undergoing in vitro fertilization, and her physician is explaining prenatal development. Dr. Sanchez has just told her that the zygote will attach to t

American psychologist harry harlow is best known for his maternal separation, dependency needs, and social isolation experiments. What type of animal did he use

The cdc reported that more elderly hispanic individuals than elderly white men and women are getting the influenza vaccine. the healthcare industry calls this d

Regardless of whether you’re getting a job or going to college, what interests and skills do you have that you can utilize as you head into life after graduatin

If the direction of v⃗ ′ is reversed, so both charges are moving in the same direction, what is the magnitude of the magnetic forces that the two charges exert

ACCESS MORE

andriansp andriansp · Answer 1 · 2016-04-28T15:25:06+02:00

since there's no available options,

There are basically two reasons :
- To make it look more profitable for the debtor
- The bank offer a lower initial rate to reduce the risk of Bad Debt Expense.

When bank offer a loan, there are always a risk of the debtor not able to return the loan. That's why bank lower the initial rate at first. After a set period of time, when the debtor became more financially stable, that's when the interest started to increase so the bank could gain some profit