Question

1. Your friend wants to purchase a new TESLA Model 3 car for $67,000. All wheel drive, Long range battery, and dual motors. He has no savings, so he needs to finance the entire purchase amount. With no down payment, the interest rate on the loan is 10 % and the maturity of the loan is 7 years. His monthly payments will be $1112.28 each month. He earns $3000.00 a month. He has a credit card limit of $13,000 and an interest rate of 24%. If he uses all of his monthly earnings to pay off his monthly expenses: his rent of $1500, utilities of $100, groceries of $300, cell phone bill of $75, insurance of $200, entertainment of $300 and make the monthly payments on the car $1112.28, he will have to put some expenses on his credit card.
   
   a) how much will he add each month to his credit card balance if he uses it to finance the remainder of his lifestyle?
   
   

b) What will the finance charges be on his credit card for the first 3 months that finance charges apply? (Assuming he makes no payments towards his credit card).

Answer 1

a. Money charged to credit card per month = (Earnings - Rent - Utilities - Groceries - Insurance - Cell Phone Bill - Entertainment - Car Monthly Payments)

Money charged to credit card per month = $587.28 (absolute Value)

b. Finance Charge for three months