We are NOT told 1) the finance charge and 2) the amount of time <span>
<span>
19,850.00
<span>
Car Price +1,488.75 Sales Tax
</span>
<span>
</span><span> -1,000.00
Down Payment </span>
20,338.75
</span>
</span>
This is the amount being financed
Using a loan calculator http://www.1728.org/calcloan.htm We see that if the loan is for 9.382% and it is for 5 years, Then the monthly payment is $425.98 We will make 60 (12 months * 5) monthly payments resulting in a total loan cost of 425.98 * 60 =
<span>
<span>
25,558.80
</span>
</span>
Total Loan Cost -20,338.75 Money Being Financed
5,220.05 Five Year's Interest ******************************************************************** THIS ISN'T EXACTLY RIGHT - SCROLL TO THE BOTTOM So, 5,220.05 / 60 = Interest Paid each month. = $87.00
So, 425.98 -87.00 <span>
<span>
338.98
</span>
</span>
Each month goes toward the principal. ****************************************************************************************** Although, the monthly payment remains exactly the same each month, the amount going toward interest and the amount going to equity (what you own), changes drastically each month. See the mortgage calculator http://www.1728.org/mortmnts.htm
So, your first payment, of 452.98 pays for $159.02 in interest and $266.95 in principal.
