Question

A friend is going to take out a $15 000 bank loan over 3 years to...

A friend is going to take out a $15 000 bank loan over 3 years to buy a secondhand car. Which of the following would you recommend?

(i) 9.99% simple interest (ii) 8.76% interest compounded daily (iii) 8.71% interest compounded monthly

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Answer #1

Answer - repayment with 9.99% simple interest will be $19495.5 ;

Repayment with 8.76% daily compounding will be $19507.88

Repayment with 8.71% monthly compounding will be $19460.88

So, the option with monthly compounding will be best with lowest repayment amount.

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