Question: We are considering purchasing a car. We can obtain financing (a loan) from the dealer or the bank. The term of either loan will be

  1. We are considering purchasing a car. We can obtain financing (a loan) from the dealer or the bank. The term of either loan will be 5 years (with monthly payments).

    The dealer offers a loan with an annual nominal interest rate of 1.9% for the full cost of $24, 000 (including taxes, etc) or we may purchase the car at the discounted price of $21, 500 and finance through the bank at an interest rate of 4.5%.

    Which option should you choose?

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