Question

You need to borrow $20,000 to complete the purchase of a car. Kindly Kline Auto Finance is offering a 4-year loan at a stated rate of 9% per year. What will be your monthly payment on this loan, assuming you make your first payment one month after taking out the loan?

Answer 1

A	Initial Loan amount	$ 20,000.00
B	Stated Interest %	9%
C=A x B	Interest per Annum	$    1,800.00
D	Number of Years	4
E	Total Interest payments in 4 years	$    7,200.00
F=E + A	Total payments to be made	$ 27,200.00
G=F/48	Monthly payments	$        566.67

Monthly payments =$566.67 or 567

Stated interest rate is like a rate of return on investment. Stated interest does not compound on monthly or annually.

Kindle kline auto finance will earn 9% on $20000 every year and will earn total of $7200 in 4 years.

$7200 is 9% interest on $20000 investment for 4 years.