Jaycee is seeking to purchase a motor vehicle for approximately $20,000 and requires finance for $18,000 in order to complete the purchase. He has approach three banks and has the following options:

 

Option A: 3-year loan with end of month repayments of $900 at 15% per annum

Option B: 2-year loan with end of month repayments of $1300 at 18% per annum

Option C: 3-year loan with end of quarter repayments of $2700 at 15%

 

a) On what financial basis should Jaycee seek to differentiate and select between the different finance options?

 

b) Convert the payments involved in each of the three options to a common base and calculate the interest payments for each.

 

c) Advise Jaycee as to the preferred finance alternative.