How can one find the total cost of a loan?

Finding the total cost of a loan is most accurately determined by multiplying the loan term by the monthly payment. This method includes all the monthly payments made over the life of the loan, reflecting not just the principal amount borrowed but also the interest accrued throughout the repayment period.

By focusing on the loan term and the monthly payment, you capture the full financial obligation that the borrower is responsible for. It provides a clear view of the total monetary outflow, enabling better budgeting and financial planning.

While other options may relate to aspects of loans, they do not fully encompass the total cost in the way that calculating the total of all monthly payments over the life of the loan does. For example, adding the down payment to the loan amount reflects upfront costs but not the total cost over time. Similarly, calculating the average interest rate or the total points associated with the loan only provides partial information and does not encompass the total financial impact of the loan.