Question

A bank tells you that if you increase your credit score by 50 points, it will reduce your interest rate on your $10,000 car loan by 1 percent. How much will this save you in the first year? a) $1 b) $10 c) $100 d) $1,000

Answer 1

Answer:

Option (c) $100

Explanation:

Data provided in the question:

Amount of car loan = $10,000

Now,

With increase of 50 points of credit score, the interest rate reduces by 1 percent

Therefore,

The amount of saved  for the first year i.e for 1 year will be calculated using the formula

Interest  = Principle × Rate × Time

Interest  = $10,000  × 1% × 1

= $10,000  × 0.01 × 1

= $100

Hence,

Option (c) $100