Which of these statements is true?(1 point) Responses You can save money by making the smallest down payment the lender will allow. 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 more you owe, the higher your interest payment will be. There is no reason to pay off a loan early. There is no reason to pay off a loan early. When shopping for a loan, you need to compare only APRs.
The statement "The more you owe, the higher your interest payment will be" is true.
The statement that is true is: "The more you owe, the higher your interest payment will be."
To determine which statement is true, we need to evaluate each statement individually. Here's how you can do it:
1. "You can save money by making the smallest down payment the lender will allow."
This statement is subjective and can vary depending on the specific loan terms and conditions. In general, making a larger down payment can help reduce your overall loan amount and potentially save on interest payments. However, some lenders may offer favorable terms for smaller down payments. To determine if making the smallest down payment will save you money, you should compare the overall cost of different down payment options and consider factors like interest rates, loan duration, and any additional fees associated with the loan.
2. "The more you owe, the higher your interest payment will be."
This statement is generally true. When you borrow a larger amount, the interest charges on that loan increase since interest is typically calculated based on the principal balance. The higher the principal balance, the more interest you will have to pay over the life of the loan.
3. "There is no reason to pay off a loan early."
This statement is not necessarily true. Paying off a loan early can have several advantages, including saving on interest payments and improving your credit score. However, it's important to consider any potential prepayment penalties or fees associated with early repayment. Calculating the cost-benefit analysis of early loan repayment is recommended to determine if it's financially advantageous in your specific situation.
4. "When shopping for a loan, you need to compare only APRs."
This statement is not entirely accurate. While the Annual Percentage Rate (APR) is an essential factor to consider when comparing loans, it shouldn't be the sole metric for comparison. Other factors, such as interest rates, loan term, fees, and repayment options, should be taken into account. Evaluating the complete loan package will provide a clearer understanding of its overall cost and suitability for your needs.
In summary, the statement that is generally true is: "The more you owe, the higher your interest payment will be."