The statement that is true about down payments is: "D. The larger the down payment, the lower the principal."

Here's why:

A down payment is the amount of money you pay upfront to secure a purchase, like a home or a car. The remaining amount of the purchase price is usually covered by a loan, which is referred to as the principal.

So, if you make a larger down payment, you're reducing the amount of money that needs to be covered by the loan. This means the principal - the amount you need to pay back - is lower.

The other statements are not necessarily true:

A. The larger the down payment, the higher your monthly payments will be. This is not true because a larger down payment would actually reduce your loan amount and therefore potentially lower your monthly payments.

B. The smaller the down payment, the lower the principal. This is not true because a smaller down payment would mean a larger loan amount, hence a higher principal.

C. The smaller the down payment, the lower the interest rate. This is not true because the interest rate is determined by the lender based on various factors, including your credit score, and is not directly affected by the size of your down payment. In fact, a smaller down payment could potentially lead to a higher interest rate because the lender is taking on more risk.

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The statement that is true about down payments is: "D. The larger the down payment, the lower the principal."

Here's why:

A down payment is the amount of money you pay upfront to secure a purchase, like a home or a car. The remaining amount of the purchase price is usually covered by a loan, which is referred to as the principal.

So, if you make a larger down payment, you're reducing the amount of money that needs to be covered by the loan. This means the principal - the amount you need to pay back - is lower.

The other statements are not necessarily true:

A. The larger the down payment, the higher your monthly payments will be. This is not true because a larger down payment would actually reduce your loan amount and therefore potentially lower your monthly payments.

B. The smaller the down payment, the lower the principal. This is not true because a smaller down payment would mean a larger loan amount, hence a higher principal.

C. The smaller the down payment, the lower the interest rate. This is not true because the interest rate is determined by the lender based on various factors, including your credit score, and is not directly affected by the size of your down payment. In fact, a smaller down payment could potentially lead to a higher interest rate because the lender is taking on more risk.

Knowee AI · Accepted Answer

The statement that is true about down payments is: "D. The larger the down payment, the lower the principal."

Here's why:

A down payment is the amount of money you pay upfront to secure a purchase, like a home or a car. The remaining amount of the purchase price is usually covered by a loan, which is referred to as the principal.

So, if you make a larger down payment, you're reducing the amount of money that needs to be covered by the loan. This means the principal - the amount you need to pay back - is lower.

The other statements are not necessarily true:

A. The larger the down payment, the higher your monthly payments will be. This is not true because a larger down payment would actually reduce your loan amount and therefore potentially lower your monthly payments.

B. The smaller the down payment, the lower the principal. This is not true because a smaller down payment would mean a larger loan amount, hence a higher principal.

C. The smaller the down payment, the lower the interest rate. This is not true because the interest rate is determined by the lender based on various factors, including your credit score, and is not directly affected by the size of your down payment. In fact, a smaller down payment could potentially lead to a higher interest rate because the lender is taking on more risk.

Which statement is true about down payments?A.The larger the down payment, the higher your monthly payments will be.B.The smaller the down payment, the lower the principal.C.The smaller the down payment, the lower the interest rate.D.The larger the down payment, the lower the principal.

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