The Hillcrest Credit Union charges more for a 6-year car loan than for a 3-year

car loan. What accounts for this difference?

The options are

A. There are more people who want 6-year loans. B. The bank wants to discourage people from buying cars. C. There is a greater risk that a 6-year loan will not be repaid. D. The bank wants to move money from personal loans to business loans.

The answer is C. There is a greater risk that a 6-year loan will not be repaid.

Loans are given out to people to people under some certain conditions and a number of risks are involved. The loans have a set up time for its servicing and repayment. The shorter the amount of years the loan is meant to be serviced, the lesser risk of repayment. Unforeseen circumstances could offer and distort the loan repayment which is why Hillcrest Credit Union charges more for a 6-year car loan than for a 3-year due to greater risk that a 6-year loan will not be repaid.