128k views
3 votes
Which loan is better and why?

A) The 48-month term loan because it has lower total interest.
B) The 60-month term loan because it has lower monthly payments.
C) Both loans are equally good.
D) Neither loan is a good option.

User Muffs
by
6.6k points

1 Answer

5 votes

Final answer:

The 48-month term loan (option A) is better because it has lower total interest.

Step-by-step explanation:

Option A states that the 48-month term loan is better because it has lower total interest. To determine which loan is better, we need to consider both the total interest and the monthly payments.

Option B mentions the 60-month term loan having lower monthly payments. While lower monthly payments may seem appealing, it is important to understand that extending the loan term can result in paying more interest over time.

In the case of option A, the 48-month term loan, even though the monthly payments may be higher compared to option B, the shorter term means less time for interest to accrue. This results in a lower total interest paid over the life of the loan.

Option C, stating that both loans are equally good, is not accurate because the comparison of the loans shows that one loan has lower total interest, making it a better option.

Option D, stating that neither loan is a good option, is also not accurate. Based on the information given, option A appears to be the better choice due to the lower total interest.

In conclusion, the correct answer is that the 48-month term loan (option A) is better because it has lower total interest.

User TechnoCorner
by
7.5k points