Final answer:
To determine which loan best meets the person's needs, we need to compare the total cost of each loan option. The 3-year loan at 7% APR would be the best choice, as it has the lowest total cost of 14,171.44.
Step-by-step explanation:
To determine which loan best meets the person's needs, we need to compare the total cost of each loan option. Let's calculate the total cost of each loan:
Option A:
- Loan amount: 13,000
- Interest rate: 7% APR
- Loan term: 3 years (36 months)
Using the formula for calculating the monthly payment on a loan, we can determine that the monthly payment for Option A is approximately 394.74.
Total cost = Monthly payment x Loan term = 394.74 x 36 = 14,171.44
Option B:
- Loan amount: 13,000
- Interest rate: 7.5% APR
- Loan term: 4 years (48 months)
Using the same formula, we can determine that the monthly payment for Option B is approximately $318.58.
Total cost = Monthly payment x Loan term = 318.58 x 48 = 15,283.84
Option C:
- Loan amount: 13,000
- Interest rate: 8% APR
- Loan term: 5 years (60 months)
Again, using the formula, we can determine that the monthly payment for Option C is approximately 263.01.
Total cost = Monthly payment x Loan term = 263.01 x 60 = 15,780.60
Based on the calculations, the 3-year loan at 7% APR (Option A) would be the best choice, as it has the lowest total cost of 14,171.44.