Question

You want to buy a dream car. Its sticker price is $70,000. The bank is offering you financing at 3.45% for 48 months. If you are required to make a 25% down payment, estimate your monthly payment.

Answer 1

Information provided:

Interest rate= 3.45%/12= 0.2875%

Time= 48 months

Cost of car= $70,000

Down payment= 25%   0.25*$70,000= $17,500

Loan taken to purchase the car= $70,000 - $17,500= $52,500

The amount of monthly payment is calculated by entering the below in a financial calculator:

PV= 52,500

N= 48

I/Y= 0.2875

Press the CPT key and PMT to compute the monthly payment.

The value obtained is $1,172.52.

Therefore, the amount of monthly payment is $1,172.52.

In case of any further queries, kindly comment on the solution