Question

You wish to borrow $8000 for debt consolidation. The bank's interest rate for a personal loan is 7.2%. What is your monthly payment if you want to pay off the loan in 3 years?

Answer 1

The monthly payment  is $242.44 for loan to paid off in 3 years.

Step-by-step explanation:

The amount borrowed = Principal = $8000

The rate of interest = 7.2%

Time (T)  = 3 years

Now, Simple Interest = $\frac{P\times R \times T}{100}$

$\implies SI = \frac{8000 \times 7.2 \times 3}{100} = 1,728$

So, the total interest = $1728

Now, Amount to be paid  = Principal + Interest

⇒ A = $8000 + $1728  = $8728

Also, 1 year = 12 months

⇒  3 years  = 3 x 12 months  = 36 months

So, total amount to be paid in 36 months is $8728.

⇒The  amount to be paid in 1 month is $(\frac{8728}{36} ) = 242.44$

Hence, the monthly payment  is $242.44 if loan is to paid off in 3 years.