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You wish to buy a $29,500 car. The dealer offers you a 4-year loan with a...

You wish to buy a $29,500 car. The dealer offers you a 4-year loan with a 10.8 percent APR. What are the monthly payments? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

How would the payment differ if you paid interest only? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

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Answer #1

Loan amount to Buy car = $29,500

Calculating the Monthly Loan Payment:-

P = Loan amount = $29,500
r = Periodic Interest rate = 10.8%/12 = 0.9%
n= no of periods of loan = 4 years*12 = 48

Monthly Payment = $759.58

b). If monthly Payment consist only of Interest,

Monthly Payment = Loan AMount*Periodic Interest rate = $29,500*0.9%

Monthly Payment in case of Interest only = $265.50

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