Final answer:
Josh needs to request the Annual Percentage Rate (APR) to compare the actual year-long cost of car loans from three banks. The APR includes interest and any additional fees, and it's a key factor for making informed loan decisions.
Step-by-step explanation:
Josh is looking to understand the annual cost of a car loan from different banks. To do this, he needs to ask for the Annual Percentage Rate (APR). The APR represents the actual yearly cost of funds over the term of a loan and includes interest and any additional fees. It is a standardized measure that allows borrowers to compare different loan products on an equal basis, considering both interest rates and other charges.
When a bank decides to lend money, it must consider the borrower's ability to repay, their credit score, and the loan's security. Borrowers, in turn, should try to understand all costs associated with a loan, including down payment, interest rates, fees, and insurance requirements. For auto loans, it's mandatory to have auto insurance, and one can save money by comparing rates and asking about discounts.
Knowing how to manage loans and interest responsibly can prevent financial strain. Josh's ability to calculate and comprehend the APR will enable him to select the most affordable loan that suits his financial situation.