Question

You just bought a new car for $27,718. The car loan contract specifies that the interest...

You just bought a new car for $27,718. The car loan contract specifies that the interest rate on your car loan is 4.5% APR compounded monthly, your down-payment is $2,718, and the term for the loan is 5 years. You must make monthly payments on your loan starting in one month's time. What is the monthly payment?

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Answer #1

Car Amount = $ 27,718

Down-Payment = $2.718

Loan Amount = Car amount - Down payment

=$27,718 - $2718

=$25,000

Calculating the monthly payment of loan starting in one month's time:-

where, P = Loan amount = $25,000

r = Periodic Interest rate =4.5%/12 =0.375%

n= no of periods = 5 years*12 = 60

Monthly Payment = $466.08

So, the monthly payment is $466.08

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