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Unsecured debt interest rates are usually ___ when compared to secured debt.
(1 point)
higher
the same as
unpredictable

Ask by Wagner Ellis. in the United States
Jan 23,2025

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Unsecured debt interest rates are usually higher than secured debt.

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Unsecured debt interest rates are usually higher when compared to secured debt because lenders face more risk. In secured debt, the borrower offers an asset as collateral, which can be seized if they default. This reduces the lender’s risk, allowing them to offer lower interest rates. In contrast, unsecured debt does not have this safety net, so lenders charge higher rates to cover the potential losses from defaults.
In practical terms, if you’re considering taking on any form of debt, it’s wise to shop around and compare interest rates. You’ll often find that offering collateral can significantly save you money on interest payments. However, always read the fine print! Sometimes the allure of a low rate can hide fees or unfavorable terms that could cost you more in the long run.

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\begin{tabular}{l|l}\multicolumn{1}{l}{ A variable that can't be accounted for is } & The author backs up the statement that the economy \\ can be unpredictable by pointing out that \\ a natural disaster such as a hurricane. As the & result of a hurricane, demand is guaranteed \\ to increase in a way that could not have been & (A) banking panics occur when confidence in the financial \\ system is strong. \\ predicted because the flow of goods into & (B) natural disasters can affect the demand for goods and \\ disrupt production. \\ impacted areas is blocked. If crops or power \\ facilities like oil refineries are damaged, then & C. customers are more willing to buy something when \\ interest rates are low. \\ demand is also affected. & (D) inflation occurs when prices for goods and services \\ decrease too quickly. \end{tabular}
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