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.

Question

option 1:repay the loan in 6 months with a 9% APR
option 2:repay the loan in 9 months with a 12% APR
a $66.03
b $135.82
c $126.66
d $60.63

Answer 1

To determine the difference in the total cost of repaying the loan, we need to calculate the total amount repaid for each option.

Option 1: Repayment in 6 months with a 9% APR
Using an online loan calculator, we can calculate the monthly payment amount:
Loan Amount: $2,500
Loan Term: 6 months
APR: 9%

Monthly Payment: $428.46

Total Amount Repaid: $428.46 x 6 = $2,570.76

Option 2: Repayment in 9 months with a 12% APR
Using the same process, we can calculate the monthly payment amount for this option:
Loan Amount: $2,500
Loan Term: 9 months
APR: 12%

Monthly Payment: $297.71

Total Amount Repaid: $297.71 x 9 = $2,679.39

Now, we can calculate the difference between the total amounts repaid:
Difference in Total Amounts Repaid: $2,679.39 - $2,570.76 = $108.63

Therefore, the difference in the total cost of repaying the loan between the two payment options is approximately $108.63.

The available options do not match the calculated difference.