2. Characteristics of single-payment or installment loans andfixed- or variable-rate loans Single-Payment versus Installment Loans, and Fixed-Rate versus Variable-Rate Loans Payments on consumer loans are described by the terms of the loan. When the loan is paid is one factor. An installment loan is paid either periodically over the life of the lonn, usually monthly, and a single-payment loan is what the name implies: a loan whose entire balance is paid at once, usually ranging from a month to a year after the loan is made. Interest charged on the loan is another factor. Rates are either fixed or variable. A fixed rate is the same throughout the life of the loan. A variable rate may change over the life of the loan and is usually tied to current market conditions. Kate and Manuel both needed loans, but they had different reasons, personalities, and financlal positions. They each had to choose between obtaining a single-payment or an installment loan. Kate Kate wanted to rent a share in a ski house for the upcoming winter, a six-month season. The house owner would not allow Kate to pay the rent in six equal payments over the course of the ski season and, instead, required full payment up front. Kate found an investment opportunity promising a 7% annual retum. She also found a loan with a 4% annual interest rate. She decided to take out the loan to pay the landlord the full amount of the rental. Every month, Kate planned to deposited one sixth of the loan amount (or what would have been the monthly rental payment) into the investment and take the chance that the investment would retum what it promised. Kate most likely took out loan because she Manuel Manuel needed a loan and knew that he would be loss likely to defalit if kubject to monthly, fixed paymente. Manuel most likeby took out toan because. Veierie and Antonio both needed loans, but chey had cifferent reasons, personalities, and financial postions. They each had to choose between obtaining a fixed rate or variable-rate loen. pay the landlond the full amount of the rental. Every month, Kate planned to deposited one shath of the loan amount (or whot would have been the monthly rental payment) into the investment and take the chance that the itrvestrient would return what it promised. Kate most likely took out loan because she Manuel Manuel needed a loan and knew that he would be less likely to default if subject to monthly, fixed payments. Manuel most likely took out loan because Valerie and Antonio both needed loans, but they had different reasons, personalities, and financlal positions. They each had to choose between obtaining a fixed-rate or variable-rate loan