A small business refits its store. The builders charge them $125,000, which will be paid back in monthly installments over three years at 6% APR. The builders will reduce this rate to 5.5% APR if they pay $2500 up front. By approximately how much will this reduce the monthly loan repayments ?

Question

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The reduction in APR from 6% to 5.5% results in lower interest over the loan term. Calculating the monthly payments for both scenarios and finding the difference gives approximately $104 reduction in monthly repayments.

A Small Business Refits Its Store