Answer:
D. Choosing a loan with a simple rather than compound interest rate
Explanation:
Simple interest is based only on the amount of principal amount of the interest. Compound interest on the other hand, is based on the principal amount Added with interest accumulated throughout the period of the loan. Because of this ,Compound interest usually will create higher amount of interest payment compared to simple interest.
Example:
A $100 loan with 1% / month interest rate
Simple interest :
1st month : 1% x $ 100 = $1
2nd month : 1% x $100 = $1
Compound interest
1st month : 1% x $100 = $1
2nd month : 1% x ($100 + $1) = $1.01
