Question

Mona is comparing financing rates from a car dealer and her local bank. The dealer is offering zero down and zero percent financing for 36 months, whereas her bank is offering her a 3.5% annual rate on a five year loan and requires a 10 percent down payment. If Mona accepts dealer financing,

A) her payments may be higher than bank financing.
B) her payments will always be less than bank financing.
C) the dealer will make a lower profit.
D) the dealer will require a higher down payment.

Answer 1

If Mona accepts dealer financing,A) her payments may be higher than bank financing.

Step-by-step explanation:

Dealer

10000 3333,33

3333,33

3333,33

Bank

Due" Additional Payment Interest Principal Balance

10.000

2.214,81 350,00 1.864,81 8.135,19

2.214,81 284,73 1.930,08 6.205,11

2.214,81 217,18 1.997,63 4.207,48

2.214,81 147,26 2.067,55 2.139,93

2.214,83 74,90 2.139,93 0,00