Because of a job change, Charles Wallace has just relocated to the southeastern United States. He sold his furniture before he moved, so he’s now shopping for new furnishings. At a local furniture store, he’s found an assortment of couches, chairs, tables, and beds that he thinks would look great in his new two-bedroom apartment; the total cost for everything is $6,400. Because of moving costs, Charles is a bit short of cash right now, so he’s decided to take out an installment loan for $6,400 to pay for the furniture. The furniture store offers to lend him the money for 48 months at an add-on interest rate of 6.5 percent. The credit union at Charles’s firm also offers to lend him the money—they’ll give him the loan at an interest rate of 6 percent simple, but only for a term of 24 months.

a. Compute the monthly payments for both of the loan offers.

b. Determine the APR for both loans.

c. Which is more important: low payments or a low APR? Explain.