5. which of these statements best explains why its often a good idea to pay more than the monthly amount due…

5. which of these statements best explains why its often a good idea to pay more than the monthly amount due on an amortized loan?\nevery time you pay extra, the lender will reduce the interest rate theyre charging by a small amount\nthe extra payment will be applied to the principal amount you owe, which will pay down your debt more quickly\nthe extra payment will be applied to the interest you owe, which will reduce the overall cost of your loan\namortized loans typically have much higher interest rates than credit cards, so theyre the best place to put your extra cash

5. which of these statements best explains why its often a good idea to pay more than the monthly amount due on an amortized loan?\nevery time you pay extra, the lender will reduce the interest rate theyre charging by a small amount\nthe extra payment will be applied to the principal amount you owe, which will pay down your debt more quickly\nthe extra payment will be applied to the interest you owe, which will reduce the overall cost of your loan\namortized loans typically have much higher interest rates than credit cards, so theyre the best place to put your extra cash

Answer

Brief Explanations:

When paying extra on an amortized loan, the extra amount goes towards the principal. Reducing the principal means less interest accrues over time and the debt is paid off faster. Lenders don't typically reduce the interest rate just because of an extra - payment. Extra payments don't usually go first to interest, and amortized loans don't always have higher interest rates than credit - cards.

Answer:

The extra payment will be applied to the principal amount you owe, which will pay down your debt more quickly.