Read the scenario.Casey has been saving for a new car and is ready to make a purchase. Having a substantial amount to put down as a down payment, Casey approaches the car dealership. The salesperson and the loan officer view Casey's willingness to make a high down payment positively.Why would Casey be considered a lower risk by the lender for planning to make a high down payment?
Answer
A
It shows that Casey prefers a high-interest rate.
B
It shows that Casey is committed to paying off the loan.
C
It shows that Casey may not need a loan at all.
D
It shows that Casey might refinance the loan soon.
Explanation
A substantial down payment means Casey will borrow less, reducing the lender’s potential loss if Casey cannot repay. It also shows Casey has saved money and is financially committed to the purchase and loan. Therefore, the best choice is “It shows that Casey is committed to paying off the loan.”
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