Using an online loan calculator, determine the difference in the total cost of repaying a $2,500 easy access loan between the two payment options shown here.
Option 1: Repay the loan in 6 months with a 9% APR.
Option 2: Repay the loan in 9 months with a 12% APR.
To determine the difference in the total cost of repaying the loan, we need to calculate the total repayment amount for each option.
Option 1: Repaying the loan in 6 months with a 9% APR.
Using an online loan calculator, we enter the loan amount ($2,500), the annual percentage rate (9%), and the loan term (6 months).
The calculator shows that the monthly payment for this option is $420.53.
Therefore, the total repayment amount for Option 1 is 6 x $420.53 = $2,523.18.
Option 2: Repaying the loan in 9 months with a 12% APR.
Using the same loan amount ($2,500) and entering the annual percentage rate (12%) and loan term (9 months) into the loan calculator.
The calculator shows that the monthly payment for this option is $302.97.
Therefore, the total repayment amount for Option 2 is 9 x $302.97 = $2,726.73.
The difference in the total cost of repaying the loan between the two options is $2,726.73 - $2,523.18 = $203.55.