Question

Rachel needs a car to get to work and school. She's decided on a used car with a cost of $9,000. According to her budget, she can afford to pay up to $275 per month in car payments. Which loan offer is best for Rachel?


Length of Loan APR Late Payment Fee Monthly Payment Total Cost of Loan
Offer 1 24 months 4.5% $35 $393 $9,428
Offer 2 36 months 5% $20 $270 $9,711
Offer 3 48 months 5.5% $45 $209 $10,047
Offer 4 60 months 6.5% $25 $176 $10,566
Offer 1, because it has the lowest APR and lowest total cost of the loan
Offer 2, because it has the lowest total loan cost of the offers with a monthly payment in her budget
Offer 3, because a low monthly payment and the lowest late payment fee
Offer 4, because it has the lowest monthly payment which frees up her budget for more fun with friends

Answer 1

e