Which of these statements is true?

Question

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
There is no reason to pay off loan early
When shopping for a loan,you need to compare only APR's

Answer 1

Let’s evaluate each statement:

1. You can save money by making the smallest down payment the lender will allow.
   False. While making a smaller down payment might allow you to keep more cash on hand, it generally leads to higher monthly payments and potentially more interest paid over the life of the loan. A larger down payment often results in better loan terms, including lower interest rates.

2. The more you owe, the higher your interest payment will be.
   True. Interest payments are typically calculated as a percentage of the amount owed. Therefore, the more you owe, the higher your interest payment will be.

3. There is no reason to pay off loan early.
   False. Paying off a loan early can save you money on interest payments, although there may be penalties associated with early repayment for some loans. Generally, there are benefits to paying off loans early if financially feasible.

4. When shopping for a loan, you need to compare only APRs.
   False. While the Annual Percentage Rate (APR) is important as it includes both the interest rate and any associated fees, it is also essential to consider other factors such as loan terms, fees, flexibility, and total cost over the life of the loan.

Based on this evaluation, the true statement is: The more you owe, the higher your interest payment will be.