Suppose that you decide to buy a car for $26,635, including taxes and license fees. you saved $8000 for a down payment and can get a five-year car loan at 6.39%. find the monthly payment and the total interest for the loan.

Answer-

Solution-

Formula used-

Cost of the car = $26635

Down-payment amount = $8000

So, Present Value of the annuity = 26635-8000 = $18635

r = rate of interest = 6.39% annual =  % monthly

n = time period = 5 years = 60 months

Putting the values in the formula,

Hence, your monthly payment will be $363.66

The total amount you will be paying in 5 years (including down-payment) is,

Therefore, the total interest for the loan will be