Accounting Fundamentals Certification (AFC) 2025 – 400 Free Practice Questions to Pass the Exam

Question: 1 / 400

Which type of loan typically has the highest interest rates charged?

HELOC lines of credit

HELOC lump sum loans

Balance transfer loans

Cash advance loans

Cash advance loans typically carry the highest interest rates among the options presented. These loans allow borrowers to access funds quickly, often through credit card cash advances or payday loans, but the convenience comes at a significant cost. The high-risk nature of cash advances—due to their immediate approval process and the potential for consumers to fall into a cycle of debt—justifies the elevated interest rates charged by lenders.

For context, while HELOC lines of credit and lump sum loans can offer competitive interest rates, they are generally secured by the equity in a home, which reduces the lender's risk and often translates to lower rates. Balance transfer loans can provide temporary relief from high-interest credit card debt, but again, they usually come with significantly lower rates than cash advances because they are part of a structured repayment plan.

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