You are borrowing $1,000 with an APR of 10% and a loan maturity of 1 year. Total interest charges will be the highest when:
A)you pay off the loan in 12 monthly installments.
B)you pay off the loan in 10 monthly installments.
C)you make one payment in full at the end of the year.
D)you prepay the loan 6 months prior to the maturity of the loan.
E)you pay off the loan within 30 days.

Question

Quizplus · Accepted Answer

Interest charges accumulate over time, so making one payment in full at the end of the year allows the interest to accrue for the entire year, resulting in the highest total interest charges.

You Are Borrowing $1,000 with an APR of 10% and a Loan