6th Grade Financial Literacy Practice Test

When comparing loans, focus on the total amount you’ll repay over the life of the loan, not just the monthly bill. The best measure is the total cost, including interest, because interest grows the amount you pay beyond the original amount borrowed. A loan with a higher interest rate or a longer repayment period can cost much more overall even if the monthly payment isn’t dramatically different. Fees like an application or origination fee also add to the total cost, so looking at the full total gives you the real picture of what you’ll pay. In short, the loan with the lowest total cost, including interest and fees, is the better choice.