Question

You just purchased a new car for $45,000. Your down payment on the vehicle was $15,000 and the rest is financed over 5 years at a 6% annual interest rate. Calculate your monthly payment.

Answer 1

Monthly Loan Payment

Loan Amount (P) = $30,000 [$45,000 - $15,000]

Monthly Interest Rate (n) = 0.50% per month (6% / 12 Months)

Number of Months (n) = 60 Months (5 Years x 12 Months)

Monthly Mortgage Payment = [P x {r (1+r)ⁿ} ] / [( 1+r)ⁿ – 1]

= [$30,000 x {0.0050 x (1 + 0.0050)⁶⁰}] / [(1 + 0.0050)⁶⁰ – 1]

= [$30,000 x {0.0050 x 1.348850}] / [1.348850 – 1]

= [$30,000 x 0.006744] / 0.348850

= $579.98 per month

“Thus, the Monthly Loan Payment would be $579.98 per month”