Jackson investigated loans for a $15,575 car. What might happen if he found a car he liked for $10,000?
(1 point)
• He would have larger monthly payments.
• The lenders will not lend him a smaller amount of money.
• He would still have to take the bank's loan offer.
• The lenders might give him a better interest rate on a smaller loan.
• The lenders might give him a better interest rate on a smaller loan.
To answer this question, let's break down the options:
1. He would have larger monthly payments: This option suggests that if Jackson chooses to purchase the car for $10,000, he would have larger monthly payments compared to a $15,575 car. This does not seem likely because typically, a smaller loan amount would result in smaller monthly payments.
2. The lenders will not lend him a smaller amount of money: This option implies that if Jackson found a car he liked for $10,000, the lenders might refuse to lend him a smaller loan amount. However, this is not necessarily true. Lenders can offer loans based on the specific purchase price of the car, and they might be willing to provide a loan for a lower-priced vehicle.
3. He would still have to take the bank's loan offer: This option suggests that regardless of the price of the car, Jackson would still need to accept the bank's loan offer. However, this is not the case. If Jackson found a car he liked for a lower price, he could explore other financing options, such as paying cash or seeking financing from a different lender.
4. The lenders might give him a better interest rate on a smaller loan: This option seems plausible. If Jackson found a car he liked for $10,000, the lenders might offer him a better interest rate on a smaller loan. This is because smaller loans generally carry less risk for lenders, and they might be inclined to provide more favorable terms.
Based on these options, the most likely answer is "The lenders might give him a better interest rate on a smaller loan." However, it is important to note that the specific terms and conditions offered by lenders can vary, so it is always advisable for Jackson to shop around, explore different financing options, and compare the terms offered by various lenders.
The correct answer is:
• The lenders might give him a better interest rate on a smaller loan.
If Jackson found a car he liked for $10,000, it means that he would need a smaller loan amount to purchase it. In such a case, lenders might offer him a better interest rate on a smaller loan. This is because the smaller loan amount represents lower risk for the lenders, and they may be willing to offer more favorable terms.