Steve purchases a new car with a down payment and a loan at a 4.9% interest rate. His loan contract is for 60 months and has no
prepayment penalties. Steve makes all his payments on time. What should he do if he wants to pay his loan off before 60 months has passed? make more than the minimum payments
use the down payment to pay down the loan
increase his auto insurance premiums to decrease the amount owed
The loan contract is of for 60 months. If Steve wants to repay the loan before 60 months , he need to pay more than the promised premiums.
In this way , the Steve will have more payment and as there is no prepayment charges, he will not be paying any penalties also. So the extra payment will help him to reduce the borrowed principle and thus thereby reducing the interest charged.
Hence out answer is option one , which says make more than the minimum payments
