# Thread: pay \$16,000 more in interest

1. ## pay \$16,000 more in interest

I think this is a problem of common sense, and you can only heed to the last sentence. How could a bank take "\$16,000" of interest annually or monthly, whatever for \$50,000 loan from a loaner? Is \$16,000 of interest for an individual customer or a group of customers for a loan type? \$16,000 seems too big for an individual.

go3mo6-30
ex)We tend to consider ourselves as rational decision makers,logically evaluating the costs and benefits of each alternative we encounter. However, we are much more primitive than most assume. A team of economists looked at how consumers reacted to various pitches by banks to take out a loan. A purely rational view would have predicted that interest rateswould be the only factor that had an impact. But the scientists varied more than just the interest rate; they also tested how persuasive other approaches might be. For instance, some letters offered a chance to win a cell phone in a lottery if the customer came in to inquire about a loan. They found that such an offer increased loan inquiries by as much as dropping the interest rate five points. For a \$50,000 loan, this meant some customers were in essence willing to pay \$16,000 more in interest to receive a \$100 cell phone.

2. ## Re: pay \$16,000 more in interest

Originally Posted by keannu
I think this is a problem of common sense, and you can only heed to the last sentence. How could a bank take "\$16,000" of interest annually or monthly, whatever for \$50,000 loan from a loaner? Is \$16,000 of interest for an individual customer or a group of customers for a loan type? \$16,000 seems too big for an individual.
It's \$16,000 more. There is no mention of 'monthly' or 'annual' payments. The writer is almost certainly referring to the total interest. \$16,000 more is very possible:

First Loan:
 Loan Balance: \$50,000.00 Loan Interest Rate: 10.00% Loan Term: 10 years Monthly Loan Payment: \$660.75 Number of Payments: 120 Cumulative Payments: \$79,290.76 Total Interest Paid: \$29,290.76

Second Loan:

 Loan Balance: \$50,000.00 Loan Interest Rate: 5.00% Loan Term: 10 years Minimum Payment Monthly Loan Payment: \$530.33 Number of Payments: 120 Cumulative Payments: \$63,639.22 Total Interest Paid: \$13,639.22

3. ## Re: pay \$16,000 more in interest

I'm only amazed at your zeal to teach. I don't know how to appreciate it(zillions of exclamation mark).

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