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Question

RBI asked banks to stop offering teaser loans. What are teaser loans?

A Loans in which interest rate are floating and varies with time Correct Answer Incorrect Answer
B Loans in which interest rates are very low initially and increase over a period of time Correct Answer Incorrect Answer
C Loans in which interest rate is high initially and goes down with time Correct Answer Incorrect Answer
D Loans in which interest rate is fixed for the tenure of the loan Correct Answer Incorrect Answer
E Loans in which interest rates keeps on changing between fixed and floating as per the requirement of the bank Correct Answer Incorrect Answer

Solution

Teaser loans are mortgage loan in which the borrower pays a very low interest rate initially and which increases after a few years. Teaser loans try to entice borrowers by offering an artificially low rate and small down payments, claiming that borrowers should be able to refinance before the increases occur.

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