Derek borrows $32,448.00 to buy a car. He will make monthly payments for 6 years. The car loan has an interest rate of 6.47%. After a 16.00 months Derek decides to pay off his car loan. How much must he give the bank?
Present value= $32,448
Time= 6 years*12= 72 months
Interest rate= 6.47%/12= 0.5392% per month
The question is solved by first computing he monthly payment.
The monthly payment is calculated by entering the below in a financial calculator:
Press the CPT key and PMT to compute the monthly payment.
The value obtained is 544.99.
Therefore, the monthly payment is $544.99.
The amount to be paid to the bank:
= $32,448 - (16*$544.99)
= $32,448 - $8,719.84
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