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← Lesson
Credit Sources: Where Borrowing Comes From and What It Costs
Question 1 of 7
Multiple choice
Why do secured loans typically carry lower interest rates than unsecured loans?
Secured loans are subsidized by the government
Collateral reduces the lender's risk, if you default, they can recover the asset, so they charge less for the lower risk
Secured loans have shorter repayment periods
Unsecured loans are only available to people with excellent credit
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