What type of loan often has a higher initial rate than fixed loans?

Adjustable rate loans typically start with a higher initial interest rate compared to fixed-rate loans. This is because adjustable rate loans are designed to be more flexible in terms of interest rate fluctuations over time. Initially, they may offer a lower "teaser" rate to attract borrowers, but once the fixed period ends—often after a couple of years—the interest rate may adjust based on market conditions, leading to a potential increase in monthly payments. This contrasts with fixed-rate loans, where the interest rate remains constant throughout the life of the loan, providing stability in payments.

The other loan types mentioned serve different purposes and have varying structures. Unsecured loans generally involve different risk assessments and might not have the same initial rate characteristics. Installment loans feature fixed payments over a specific duration, which maintains consistency in loan repayments. Revolving credit lines, such as credit cards, allow for ongoing borrowing and repayment but do not adhere to the same fixed versus adjustable rate comparison relevant to this context.