LSAT 129 | Section 2 | Logical Reasoning: Q3

LR Question 3 Explanation

QUESTION TEXT: MetroBank made loans to ten small companies, in amounts

QUESTION TYPE: Paradox

PARADOX: MetroBank made loans to ten companies.

The scheduled loan payments increased in size over time. Yet the actual payments decreased in size.

ANALYSIS: You don’t have to repay a loan on schedule. If you’re responsible, you can repay the loan faster than scheduled, leaving you with smaller or no payments at the end.

So MetroBank’s customers could have been paying their loans ahead of schedule, leading to smaller payments at the end of the payment cycle.

The right answer is a slightly modified version. MetroBank made loans ranging in size from $1,000 to $100,000. The right answer says that the largest companies paid off earlier.

___________

1. The question is only talking about ten companies that MetroBank made loans to. It doesn’t matter if MetroBank later made loans to other companies.
2. It doesn’t matter if the companies borrowed from other banks. The stimulus is only talking about MetroBank’s loans.
3. What a silly answer. Who cares what “most banks” do? This question is about one bank, MetroBank.
4. CORRECT. This solves the paradox. If the largest companies exited their loans early, then it makes sense that average payments at the end decreased: only the small borrowers were left making payments.
5. Who cares? This question is only talking about ten loans in particular. And those ten loans had scheduled increases in payments.