Question

Wade Ellis buys a new car for $16,183.11. He puts 10% down and obtains a simple interest amortized loan for the rest at 11 1/2% interest for four years. How do we find his monthly payment and total interest

Answer 1

Answer:

If a new car was purchased for a cost of $16,183.11, and a down payment of 10% of the value was made, the initial payment was $1,618.31.

Thus, the remaining amount to be financed is $14,564.79. It will be financed in 4 years, at an annual interest rate of 11.5%, for four years. Thus, the total interest will be 46% (11.5 x 4), to be distributed among the 4 years of the financing. Then, the total amount to be paid will be $21,264.59, which will be paid in 48 equal monthly payments of $443.01 (21,264.59 / 48).