Question

Someone needs to borrow $14,000 to buy a car and the person has determined that monthly payments of $250 are affordable. The bank offers a 4-year loan at 6% APR, a 5-year loan at 6.5%, or a 6-year loan at 7% APR. Which loan best meets the person's needs? Explain.

Which loan best meets the person's needs? (Round to the nearest cent)
A. The first loan best meets the person's needs because the monthly payment of $___ is less than the maximum budgeted amount of $250 per month.
B. The second loan best meets the person's needs because the monthly payment of $___ is less than the maximum budgeted amount of $250 per month.
C. The thirdloan best meets the person's needs because the monthly payment of $___ is less than the maximum budgeted amount of $250 per month.
D. None of the loans meet the person's needs.

Answer 1

Answer: 7% at 6 years would best fit their payment option. They would then be paying $238.69 monthly and which is under $250, I hope this helps!