Question

Jeanne has $14800, 3 and half loan with a high APR of 8.57 due to her less-than-average credit rating. What is the monthly payment for this loan?

Answer 1

Jeanne has $14800, 3 and half year loan with a high APR of 8.57 due to her less-than-average credit rating. What is the monthly payment for this loan?

Answer:

$409.57

Step-by-step explanation:

The formula for loan payment is given by:

$p= \frac{r(pv)}{1-(1+r)^{-n} }$

pv = present value

r = rate per period

n = number of periods

Loan period is  3 and half years

for monthly payments, number of periods is (3 and half years) x 12 months

= 3.5 x 12 months = 42 months

Annual Payment Rate = 8.57 percent = 8.57/100 =0.0857

Rate per month = Annual Payment Rate /12 months  

=  0.0857/ 12 = 0.00714

P = $\frac{0.00714(14800)}{1-(1+0.00714)^{-42} }$

$\frac{105.67}{1-(1.00714)^{-42} }$

$\frac{105.67}{1-0.742} }$

= $\frac{105.67}{0.258 }$= $409.57