Question: What difference does 0.5% make on a loan? To answer this question, find (to the nearest dollar) the monthly payment and total interest paid over the life of the loan for each of the following.
(a) An auto loan of $15,000 at 8.0% versus 8.5%, compounded monthly, for 4 years.
(b) A mortgage loan of $80,000 at 6.75% versus 7.25%, compounded monthly, for 30 years.
(c) In each of these 0.5% differences, what seems to have the greatest effect on the borrower: amount borrowed, interest rate, or duration of the loan? Explain.