1.) You (or your parents) purchase a new car for $19,725.00 plus 4.75% sales tax. The down payment is $2,175.00 and you (or your
parents) have an average credit rating. How much interest is accrued after the first month? Credit. New Car APR (%) Used Car APR (%)
Excellent 5.40 5.65
Good 5.95 6.35
Average 6.30 6.90
Fair 7.55. 7.60
Poor 9.80 10.0
2.) You (or your parents) purchase a used car for $15,867.00 plus 5.25% sales tax. The down payment is 10% of the total cost and you (or your parents) have an excellent credit rating. What is your principal balance at the start of the loan?
3.) You (or your parents) are debating about whether to buy a new car for $19,072.00 or a used car for $15,635.00. Sales tax is 4.5%. You (or your parents) plan to make a down payment of $1,200.00 and your credit rating is fair. What is the difference in interest accrued by the end of the first month?
Credit New Car APR (%) Used Car APR (%)
Excellent. 5.4 5.65
Good 5.95 6.35
Average 6.30 6.90
Fair 7.55 7.60
Poor 9.80 10.0
Remember, that because you paid $2,175 up front (down payment), you can borrow $2,175 less from the bank to purchase the car. So first step: Take new car price of $19,725.00 and multiply it by the sales tax percentage ($19,725 * 0.0475) to get $936.94 of tax.
