Question

max found a car he wants to buy that costs $16,000. He can afford to pay $250 a month for the car. His bank offers him a car loan of 7.3%. The length of his loan should be about 5 years, so he can afford the payments. true or false​

Answer 1

Max won't be able to afford the payments.

Since Max found a car he wants to buy that costs $16,000, and he can afford to pay $ 250 a month for the car, and his bank offers him a car loan of 7.3%, and the length of his loan should be about 5 years, to determine if he can afford the payments, the following calculation must be performed:

• (16000 x 1.073 ^ 5) / (5 x 12) = X
• 22,757.187 / 60 = X
• 379.28 = X

Therefore, each monthly payment will be $ 379.28, so Max won't be able to afford the payments.

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