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Ann Nguyen would like an installment loan for $5,750. Her bank will loan her the
money at 18% for 18 months. Her insurance company will loan her the money at
18% for 24 months. How much money will she save by choosing the smarter loan?

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Answer:

  $281.40

Step-by-step explanation:

A financial calculator tells you the payment for the 18-month loan is $361.46, so her total payback amount is $6506.28.

Similarly, the payment for the 24-month loan is $282.82, and the total amount repaid is 6787.68.

The shorter-term loan costs less by ...

  $6787.68 -6506.28 = $281.40

Ann can save $281.40 by choosing the shorter-term loan.

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