California Real Estate Practice Exam

Which of the following lenders tends to give the longest term on loans?

1. Banks

2. Insurance companies

3. Private individuals

4. Savings banks

The correct answer is: Banks

The choice of banks as the lender that tends to give the longest term on loans is supported by their established infrastructure and resources. Banks are typically well-capitalized institutions with a broad range of financial products, including various types of mortgages and loans. They can afford to lend over longer terms, which is often appealing to borrowers who seek stable monthly payments over an extended period. Moreover, banks often engage in extensive risk assessment and can manage long-term loans effectively due to their diversified portfolios. Other lenders, such as insurance companies, may also offer lengthy terms but are more likely to focus on specific types of loans tied to investment strategies or real estate investments. Private individuals and savings banks may have more limitations in terms of capital, risk appetite, or market niche, leading them to provide shorter loan terms compared to traditional banks.