Leah is buying a car. She has saved money for a down payment, and she takes out a loan to finance the rest of the amount owed. How much will Leah have to pay back?A.The principal plus interestB.The down payment onlyC.The principal onlyD.The principal minus the down payment
Question
Leah is buying a car. She has saved money for a down payment, and she takes out a loan to finance the rest of the amount owed. How much will Leah have to pay back?A.The principal plus interestB.The down payment onlyC.The principal onlyD.The principal minus the down payment
Solution
Leah will have to pay back A. The principal plus interest.
Here's why:
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The principal is the amount of money that Leah borrows to finance the rest of the car's cost. This is the initial amount of the loan.
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The interest is the cost of borrowing that money. It's typically expressed as a percentage of the principal and is added onto the principal over the life of the loan.
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The down payment is the amount of money that Leah has saved and pays upfront. This reduces the amount she needs to borrow, but it doesn't affect the amount she needs to pay back on the loan
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