General Education Development (GED) Practice Exam

Which of the loan options listed would require the family to pay the least amount of total interest?

1. Option A

2. Option B

3. Option C

4. Option D

The correct answer is: Option C

To determine which loan option requires the family to pay the least amount of total interest, several factors must typically be considered, including the interest rate, loan term, and the total amount borrowed. Option C likely has a combination of a lower interest rate, a shorter loan term, or both, making it the most cost-effective choice in terms of interest payments over the life of the loan. When loans have lower interest rates, the amount paid in interest accumulates at a slower rate, resulting in a lower total interest cost over time. Additionally, a shorter loan term means that the borrower will repay the loan faster, which also reduces the total interest paid because there's less time for interest to accrue. This choice also suggests that the terms of the other options may lead to either higher interest rates or longer repayment periods. Longer terms typically mean more interest paid, even at a lower rate, and higher rates will obviously increase costs significantly. Therefore, option C stands out as the most economical option regarding total interest payment, ensuring the family's financial burden is minimized.