Final answer:
Making larger payments than required on a loan will save you money over the life of the loan because it reduces the principal faster and decreases total interest accrued. Taking a loan with a longer term, a higher APR, or making a smaller down payment will generally result in paying more over time.
Step-by-step explanation:
Understanding Loan Payments and Interest RatesAmong the options provided, d. Making larger payments than required will save you money over the life of your loan. This is because larger payments can reduce the principal balance faster, thereby reducing the total amount of interest that accrues over the life of the loan. A smaller principal means interest has less of a balance to apply to, which results in lower overall costs.Option a, taking a loan with a longer term, will likely result in more interest paid over time. Option b, taking a loan with a higher APR (Annual Percentage Rate), will certainly cost more due to higher interest rates. Option c, making a smaller down payment, can also lead to more interest paid because the principal amount borrowed is larger.
Making larger payments than required will save you money over the life of your loan. When you make larger payments, you're paying off more of the principal balance, which reduces the amount of interest you'll have to pay over time. This can result in saving thousands of dollars in interest costs.As shown in Example C, paying off debt faster enables significant savings on interest, and can be particularly notable when considering long-term loans such as a 30-year mortgage. It is clear that accelerating repayment is financially beneficial when managing loans.