Question

you lease a car valued at 23,495 for 3 years at $429.95/month with a $500 down payment. If interest is 30% of the payment, how much interest is paid over the 3 years?

Answer 1

(36 payments)*($429.95)*30% = $4,643.46 . . . . interest paid over 3 years

Answer 2

Solution:

Present Value of car= $ 23,495

Down Payment = $ 500

Total Amount paid monthly for 3 years that is 36 months, if you pay $ 429.95 per month=$ 15478.20

Total amount paid for the car as an agreement which includes Down payment of $ 500 as well as monthly Payment of $ 429.95 for 36 months= $ 15478.20+$ 500=$ 15978.20

As, given Interest is  30% of the payment.

So, total interest = 30% of $ 15978

$=\frac{30}{100}\times 15978.20$

= $ 4793.40

But if you will calculate interest on payment of $ 429.95 at the rate of 30%, it gives

$=\frac{30}{100}\times 429.95$

= $128.985

So, total interest for 3 years= $128.985 ×36=$ 4643.46

Also, if you will calculate interest on payment of ($500+$429.95=$929.95) at the rate of 30%

$=\frac{30}{100}\times 929.95$

=$278.985

Total interest for 3 years= $278.985 ×36=$10,043.46