Doesn’t it depend on the length of the loan and how the interest rate is compounded? A ten year loan with a daily compounded interest rate of 3% will give you a different answer. The length of the loan being more a factor than the compound rate.
You’re overthinking the question by assuming that it wasn’t meant to be completely trivial. It wasn’t asking about compound interest, just whether 3% of a hundred is more or less than 5.