If Jeanine wants a loan with a constant interest rate, it is classified as a _________ loan.

If Jeanine wants a loan with a constant interest rate, it is classified as a _________ loan.

• A. Fixed-rate
• B. Variable-rate
• C. Tax-exempt
• D. Wraparound

Answer: (A)

A loan with a constant interest rate is classified as a fixed-rate loan. This type of loan maintains the same interest rate throughout the life of the loan, which provides borrowers with predictable monthly payments. As a result, individuals like Jeanine can plan their finances more effectively, knowing that their loan payments will not fluctuate over time due to changing interest rates. In contrast, variable-rate loans, also known as adjustable-rate loans, have interest rates that can change periodically based on market conditions, which can lead to unpredictable payment amounts. Other classifications like tax-exempt loans refer to the tax implications rather than the interest rate structure, and wraparound loans are a specific type of secondary financing that allows for one loan to encompass another without needing to pay off the first mortgage. Therefore, the characteristic of a constant interest rate clearly aligns with the definition of a fixed-rate loan.

A loan with a constant interest rate is classified as a fixed-rate loan. This type of loan maintains the same interest rate throughout the life of the loan, which provides borrowers with predictable monthly payments. As a result, individuals like Jeanine can plan their finances more effectively, knowing that their loan payments will not fluctuate over time due to changing interest rates.

In contrast, variable-rate loans, also known as adjustable-rate loans, have interest rates that can change periodically based on market conditions, which can lead to unpredictable payment amounts. Other classifications like tax-exempt loans refer to the tax implications rather than the interest rate structure, and wraparound loans are a specific type of secondary financing that allows for one loan to encompass another without needing to pay off the first mortgage. Therefore, the characteristic of a constant interest rate clearly aligns with the definition of a fixed-rate loan.