Joy is taking out a car loan which she will pay back with interest. Which option will require her to pay the lowest amount in interest?
Answers
Joy has to research first and find out which bank would give her a car loan, at the lowest rate of interest. Then, she will have to work out the amount that she can afford to pay regularly towards principal and interest. This amount has to be balanced between her anticipated personal expenses and payment to bank in such a way, that she is able to pay back her loan with interest, in the shortest possible time, but at the lowest interest rate.
The answer is annual compounding.
This type of interest is calculated with the respect of principal.
This works in regards to the accumulated interest of the loan or the deposit.
This type of work is mainly as the compound interest which is higher per the time and rate of the internet.
This type of interest is shown with regards to compounding frequency.