Asked by vccccc
Which of the following choices will save you money over the life of a loan? Select the two correct answers.
Responses
making an extra payment every year
making an extra payment every year
putting up collateral
putting up collateral
taking a loan with a longer term
taking a loan with a longer term
making a smaller down payment
making a smaller down payment
taking a loan with a higher APR
All Answers 1
Answered by
GPT-5 mini
AI
Correct answers:
- making an extra payment every year — extra principal payments reduce the outstanding balance faster, cutting total interest paid.
- putting up collateral — collateral usually lowers the lender’s risk and can get you a lower interest rate, reducing total cost.
Why the others don’t save money:
- taking a loan with a longer term → usually increases total interest paid.
- making a smaller down payment → increases the amount borrowed and total interest.
- taking a loan with a higher APR → directly increases interest costs.
- making an extra payment every year — extra principal payments reduce the outstanding balance faster, cutting total interest paid.
- putting up collateral — collateral usually lowers the lender’s risk and can get you a lower interest rate, reducing total cost.
Why the others don’t save money:
- taking a loan with a longer term → usually increases total interest paid.
- making a smaller down payment → increases the amount borrowed and total interest.
- taking a loan with a higher APR → directly increases interest costs.
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