Comparing total loan costs
Two fictional loans each provide $2,000 and are repaid over the same year. Loan A requires total payments of $2,160 with no separate fee. Loan B requires total payments of $2,120 plus a $75 separate fee. Ignore timing differences and all other costs. Which has the lower total cost?
A
Loan A, because its $160 cost is lower than Loan B’s $195 cost.
B
Loan B, because $2,120 is less than $2,160 even after all costs are included.
C
Both, because equal principal always means equal borrowing cost.
D
Loan A costs $2,160 in interest alone.
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