Question

Which of the following loans has the lowest APR?

a. A line of credit with a 29.9% APR.
b. A payday loan of $220 for a fee of $22 due in 15 days.
c. A deposit advance of $220 for a fee $11 due in 35 days.
d. An installment loan that charges and interest rate of 2.9% per month.

Answer 1

The deposit advance of $220 for a fee of $11 due in 35 days has the lowest APR among the given options.

Step-by-step explanation:

The APR (Annual Percentage Rate) represents the cost of borrowing on a yearly basis and includes both the interest rate and any additional fees. In order to determine which loan has the lowest APR, we need to compare the rates and fees for each option:

1. A line of credit with a 29.9% APR.
2. A payday loan of $220 for a fee of $22 due in 15 days.
3. A deposit advance of $220 for a fee of $11 due in 35 days.
4. An installment loan that charges an interest rate of 2.9% per month.

To compare the loans, we need to convert the monthly interest rate on the installment loan to an APR by multiplying it by 12. The APR for the installment loan is 2.9% x 12 = 34.8%. Comparing the APRs of the options, we can see that the deposit advance of $220 for a fee of $11 due in 35 days has the lowest APR, which is equivalent to approximately 9.48%.