Question

John applies for a car loan and is approved for a good interest rate. He has the option of either a 24-month or a 60-month loan term at that interest

rate. John can afford payments for both loans. Which loan should John choose to reduce the total cost of his debt? Why?
Select the best answer from the choices provided.
OA.
OB.
O C.
D.
John should choose the 24-month loan because the payments will be lower
John should choose the 60-month loan because the payments will be lower
John should choose the 24-month loan because less interest will accrue over the length of the loan
John should choose the 60-month loan because less interest will accrue over the length of the loan

Answer 1

John should choose the 24-month loan because less interest will accrue over the length of the loan. Choosing a shorter loan term means John will pay less interest over the life of the loan, even if the payments are higher.

Explanation: