Question

Please help ^^ -Rudy has arranged to buy a car for $10,240. He has a $3000 trade-in allowance and will make a $2000 down payment. He will finance the rest with a 3-year auto loan at 3.4% APR.
Monthly Car Loan Payment Per $1000 Borrowed.



(a) How much money will he borrow in an auto loan?


(b) What will his monthly auto payment be?


(c) What is the total amount of interest he will pay?


(d) What is his total payment for the car?

Answer 1

Answer:

(-) $29.26 per thousand for a 3-year 3.4% loan

(a) $5,240

(b) $153.32

(c) $279.52

Step-by-step explanation:

• Payment per thousand

The payment amount can be computed from the formula ...

A = P(r/n)/(1 -(1 +r/n)^(-nt))

where P is the principal amount, r is the annual rate, n is the number of payments per year, and t is the number of years.

For a $1000 3-year loan at 3.4%, this evaluates to ...

A = 1000(0.034/12)/(1 -(1 +0.034/12)^(-12·3)) ≈ $29.26

The monthly car payment per $1000 borrowed is $29.26.

__

• Rudy's trade-in allowance and down payment will reduce the amount he finances to ...

$10,240 -3000 -2000 = $5,240

__

• $5,240 = 5.24 × $1000, so Rudy's payment will be ...

5.24 × $29.26 = $153.32

__

• The amount of interest Rudy pays is the difference between the amount paid back and the amount of the loan.

(36 mo)×($153.32/mo) - 5240 = $279.52