3. 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 pald either periodically over the life of the loan, usually monthly, and a single-payment loan is what the name implies: a loan whose entire balance is paid ot 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 financial 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 return. 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 return what It promised. kate most likely took out loan because she Manuel Manuel took out a loan to buy new furniture. He has a steady job and a small savings account but didn't want to pay cash for the furniture, Manuel manages his finances so that his monthly income and expenses are consistent. He doesn't expect any financial windfalls in the near or distant future. Manuel most likely took out loan because Shen and Caroline both needed loans, but they had different reasons, personalities, and financial positions. They each had to choose betweer obtaining a fixed-rate or variable-rate loan. Shen Shen took out a ten-year loan. He paid $368 every month for 120 months, until the loan was paid off. Shen most likely took out a loan because the monthly payment and number of payments Caroline Caroline needed a long-term loan, somewhere between 15 and 30 years. She learned that the longer the term, the fewer rate options she had. Caroline finally had to go with the 30-year loan Caroline most likely took out a loan because