Question

the Hallall low 563 You are offered 3 options of a $50,000 car loan over 2.5 years. (a) 5% flat with level monthly installments in arrears, (b) 4.6% flat with level quarterly installments in advance, (c) 8% APR in the first year, which increases to 9% afterwards, with level quarterly installments in arrears. Which option would you choose? nou a le year loan of $10,000:

Answer 1

Based on the below calculations, Option 2 is the best since it has the least average interest % and Interest amount Payout.

Table 1

Description	Option 1 (Per EMI Table)	Option 2 (Per EMI Table)	Option 3 (Calculation Below)
Principal	50,000	50,000	50,000
EMI	1,875	1,845	NA
Total Interest	6,250	5,352	6,362
Average Interest Rate on Principal	12.50%	10.70%	12.72%

Table 2

Option 3 - Calculation
Principal	50000
	Principal	Interest
Year 1 Rate - 8%	50,000	4,000
Year 2 (Quart Rate - 9%)
Q1 - 5000	30,000	675
Q2 - 5000	25,000	563
Q3 - 5000	20,000	450
Q4 - 5000	15,000	338
Year 3 (Quart Rate - 9%)
Q1 - 5000	10,000	225
Q2 - 5000	5,000	113
		6,363