Question

11. Imagine that you are going to purchase a new car and you need a car loan. What

happens to the total cost of your car as the length of the loan gets longer?
A. The total cost goes up.
B. The total cost goes down.
C. The total cost remains the same.
Answer_

Answer 1

The correct option is A

Step-by-step explanation:

As the person went to purchase a new car and it is purchased on a loan, then the total cost of the car would goes up if the length or the period of the loan gets longer or increases then interest will also increases which in turn decrease the monthly payment.

For example, assume a 72 month loan on $28,000 vehicle, where the interest rate is 6%. By making the loan for longer period, the monthly payment will be $464. But the aggregate amount paid is $33,408 which means the the $28,000 car costs extra when financing for longer term.