Answer:
To determine the maximum loan amount you can afford, you need to know the amount of your monthly payment and the annual percentage rate (APR) of the loan. The APR is the interest rate of the loan, expressed as a yearly rate. It takes into account not only the interest rate, but also any fees or other charges associated with the loan.
In this case, you know that you can make monthly payments of $450 and that the APR of the loan is 6.5%. To determine the maximum loan amount you can afford, you can use the following formula:
Maximum loan amount = (Monthly payment / (APR / 100 / 12)) * (1 - (1 + (APR / 100 / 12))^-n)
where n is the number of monthly payments. In this case, you are taking out a 5-year loan, which means you will make 60 monthly payments (5 years * 12 months/year = 60 months), so n = 60. Plugging these values into the formula, we have
Maximum loan amount = ($450 / (6.5% / 100 / 12)) * (1 - (1 + (6.5% / 100 / 12))^-60)
= ($450 / 0.00542) * (1 - (1 + 0.00542)^-60)
= $83,146.54
Therefore, the maximum loan amount you can afford is $83,146.54. This is the maximum amount you can borrow, assuming that you make monthly payments of $450 and the APR of the loan is 6.5%. You should carefully consider your ability to make these monthly payments before taking out a loan of this amount.
Step-by-step explanation:
