Question

You want to buy a $28,000 car. The company is offering a 4% interest rate for 60 months (5 years). What will your monthly payments be?

Answer 1

Given,

Loan amount = $28000

Interest rate = 4% or 0.04

No. of months (n) = 60

Solution :-

Monthly interest rate (r) = 0.04/12 = 0.0033333333

Monthly payment = (Loan amount x r) [1 - (1 + r)^-n]

= ($28000 x 0.0033333333) [1 - (1 + 0.0033333333)^-60]

= ($93.3333324) [1 - (1.0033333333)^-60]

= $93.3333324 [1 - 0.81900310530]

= $93.3333324 0.1809968947 = $515.66