In the following question, some of the words in the passage have been left out. Read the passage carefully and choose the correct answer to each question out of the four alternatives and fill in the blanks.
An education loan, or student loan, is the amount of money borrowed by a student from a bank, specifically to pay for (1)_____ education. It helps them to cover tuition fees, books, laptops, and living expenses at national or international universities. The process of how they work is (2)_____. First, you apply to a lender by providing proof of college admission, a co-applicant (usually a parent), and (3)_____ if borrowing a large amount. Once approved, the bank pays the money directly to your college each semester. The biggest advantage is the moratorium period, which is a repayment holiday. Lenders do not force you to repay the loan while you are still studying. Instead, repayment begins six months to a year after graduation, giving you time to secure a (4)_____. Once this grace period ends, you repay the total borrowed amount plus interest through (5)_____ monthly payments over several years. Knowing these terms and conditions helps you to choose a loan with competitive interest rates and flexible repayment schedules, preventing heavy financial stress at the outset of your career.
What should come in Blank 3?
Show answer & explanation
Correct answer: C
Explanation
Correct Answer: Collateral
Explanation
• Collateral refers to an asset, property, or valuable security offered by a borrower as a guarantee to a lender until the loan is fully repaid.
• In the context of banking and high-value education loans, lenders require security or guarantee to mitigate financial risk if a large sum is borrowed.Word | Meaning
Collateral | Property or an asset pledged as security for repayment of a loan.
Endorsement | An act of giving public approval, support, or recommendation.
Insurance | Financial protection against future risk or loss.
Investment | Money allocated into assets or projects to generate profit.