Question

Kai needs a car to get to work and school. he's decided on a used car with a cost of $12,000. according to his budget, he can afford to pay up to $300 per month in car payments. which loan offer is best for kai? length of loan apr late payment fee monthly payment total cost of loan offer 1 24 months 4.5% $35 $524 $12,571 offer 2 36 months 5% $20 $360 $12,947 offer 3 48 months 5.5% $45 $279 $13,396 offer 4 60 months 6.5% $25 $235 $14,088 group of answer choices offer

a) because it has the lowest apr and lowest total cost of the loan offer
b) because it has one of the lowest aprs and the lowest late payment fee of all the loan options offer
c) because it has the lowest total loan cost of the offers with a monthly payment in his budget offer
d) because it has the lowest monthly payment and a low late payment fee

Answer 1

The best loan offer for Kai is Offer 3, which has a monthly payment of $279 within his budget, and a total loan cost of $13,396.

Step-by-step explanation:

Kai needs a car to get to work and school, and after assessing his options for a used car costing $12,000, the best loan offer would be the one that fits his budget, which allows up to a $300 per month car payment. Offer 3 has a monthly payment of $279, which is within his budget, and has a loan length of 48 months with an APR of 5.5% and a late payment fee of $45. This loan's total cost is $13,396.

While Offer 3 does not have the lowest total loan cost or the lowest APR, it is the best choice for Kai because it represents the lowest monthly payment within his budget, which is his primary concern, and this helps in avoid financial strain over the next four years. Therefore, the correct answer to the question would be offer C) because it has the lowest total loan cost of the offers with a monthly payment in his budget.