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Rachel needs a car to get to work and school. She's decided on a used car with a cost of $9,000. According to her budget, she can afford to pay up to $275 per month in car payments. Which loan offer is best for Rachel? Length of Loan APR Late Payment Fee Monthly Payment Total Cost of Loan Offer 1 24 months 4.5% $35 $393 $9,428 Offer 2 36 months 5% $20 $270 $9,711 Offer 3 48 months 5.5% $45 $209 $10,047 Offer 4 60 months 6.5% $25 $176 $10,566 Offer 1, because it has the lowest APR and lowest total cost of the loan Offer 2, because it has the lowest total loan cost of the offers with a monthly payment in her budget Offer 3, because a low monthly payment and the lowest late payment fee Offer 4, because it has the lowest monthly payment which frees up her budget for more fun with friends

Respuesta :

Answer:

the best loan offer for Rachel is Offer 2, because it has the lowest total loan cost of the offers with a monthly payment in her budget.

Explanation:

Note: The data in the question are merged together. They are therefore sorted before answering the question as follows:

               

                Length of       APR      Late Payment     Monthly         Total Cost

                    Loan                                 Fee               Payment          of Loan

Offer 1       24 months     4.5%             $35                 $393              $9,428

Offer 2      36 months     5%                $20                 $270              $9,711

Offer 3      48 months     5.5%             $45                 $209             $10,047

Offer 4      60 months     6.5%            $25                  $176              $10,566

The explanation of the answer is now given as follows:

In finance, the best loan offer between or more different loan offers is a loan offer that meets the following 2 conditions:

1. The loan must has the lowest total cost of loan.

2. The periodic payment must be within the budget of the loan beneficiary.

From data in the question, only Offer 2 meets the 2 conditions above.

Therefore, the best loan offer for Rachel is Offer 2, because it has the lowest total loan cost of the offers with a monthly payment in her budget.

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