Which of these statements is true?(1 point) Responses There is no reason to pay off a loan early. There is no reason to pay off a loan early. The more you owe, the higher your interest payment will be. The more you owe, the higher your interest payment will be. When shopping for a loan, you need to compare only APRs. When shopping for a loan, you need to compare only APRs. You can save money by making the smallest down payment the lender will allow.
The more you owe, the higher your interest payment will be.
The statement "The more you owe, the higher your interest payment will be" is true.
To determine which statement is true, let's analyze each statement one by one:
1. "There is no reason to pay off a loan early."
This statement is generally not true. Paying off a loan early can save you money on interest payments and help you become debt-free sooner. However, some loans may have prepayment penalties or higher interest rates for early repayment, so it's important to review your loan agreement before deciding to pay off a loan early.
2. "The more you owe, the higher your interest payment will be."
This statement is generally true. When you borrow money, the amount you owe determines the interest you will have to pay. The higher the loan amount, the higher the interest payment will be, assuming the interest rate remains the same.
3. "When shopping for a loan, you need to compare only APRs."
This statement is not entirely true. While the Annual Percentage Rate (APR) is an important factor to consider when comparing loans, it is not the only factor to consider. You should also consider the loan term, monthly payment, origination fees, prepayment penalties, and any other relevant terms and conditions.
4. "You can save money by making the smallest down payment the lender will allow."
This statement is not true in all cases. While making a smaller down payment may reduce your initial upfront costs, it can result in higher interest charges over the life of the loan, as well as potentially requiring you to pay Private Mortgage Insurance (PMI) if you're taking out a mortgage with a low down payment. It's important to consider the trade-offs and evaluate your financial situation before deciding on the down payment amount.
Based on these explanations, the statement that is generally true is: "The more you owe, the higher your interest payment will be."