Question

angela Montery has a five-year car loan for a jeep wrangler at an annual interest rate of 6.3% and a monthly payment of $605.50. After 3 years, Angela decides to purchase a new car. What is the payoff on angelas loan? (round answer to two decimals)

Answer 1

Answer:

Monthly Payment (E) = $605.50

Tenure of Loan = 5 X 12 = 60 months

No. of Instalments paid = 3 X 12 = 36 months

No. of Instalments unpaid (T) = Tenure of loan - No. of instalments paid = 60 - 36 = 24

Monthly Rate of Interest (R) = 6.3% / 12 = 0.525% per month = 0.00525 per month

Payoff on loan = E (1- (1+R)^-T) / R

= 605.50 X (1- (1+0.00525) ^ -24) / 0.00525

= 605.50 X (1-(1.00525 ^-24)) / 0.00525

= 605.50 X (1-0.881905472) / 0.00525

= 605.50 X 0.118094528 / 0.00525

= 71.50623658 / 0.00525

= $13,620.23554

= $13,620.24