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John qualifies for a high-interest car loan. Making a down payment will

Select the best answer from the choices provided.
OA.
0 в.
O
increase the cost of a high-interest loan
increase the interest rate on a high-interest loan
decrease the interest rate on a high-interest loan
C.
D. decrease the cost of a high-interest loan

User Loom
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1 Answer

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Final answer:

Making a down payment on a high-interest car loan will decrease the cost of the loan, as it reduces the principal, and consequently the total interest paid over time.

Step-by-step explanation:

When John makes a down payment on a high-interest car loan, it will D. decrease the cost of the high-interest loan. The down payment reduces the principal amount of the loan, which means there is less money accruing interest over time. Therefore, the total amount of interest paid over the life of the loan is decreased.

Interestingly, while making a down payment doesn't directly decrease the interest rate of the loan, it reduces the overall interest cost. This is because the interest cost is calculated based on the remaining principal. With a lower principal, less interest accrues.

User Shamy
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