Paying off a loan early saves the consumer no money if the sum-of-digits method has been used to compute finance charges.

Name: Paying off a loan early saves the consumer no money if the sum-of-digits method has been used to compute finance charges.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The sum-of-digits method calculates the finance charge based on the original loan amount and term, regardless of when the loan is paid off. Therefore, paying off the loan early does not save the consumer any money.

Paying Off a Loan Early Saves the Consumer No Money