Question

What is the reason for a bank to offer a customer to make a loan at a low initial rate which will increase after a set period of time?

A. To fool the customer into making an unmanageable commitment
B. To make the loan look more attractive and competitive in the long run
C. To make the loan look more attractive and competitive now
D. The bank accepts making less money in the later years of the loan

Answer 1

I think the correct answer from the choices listed above is option C. The reason for a bank to offer a customer to make a loan at a low initial rate which will increase after a set period of time is to make the loan look more attractive and competitive now. Hope this answers the question.