Question

You go to a car dealer and pick out a vehicle that costs $31,210 "out-the-door." Instead of paying all the cash upfront, you can put down an amount and finance the rest of the car loan. The money will be financed over 5 years at 4.5%. By hand, compute the following:

If you put down 15% of the car’s cost, what is the amount of the car loan?

Find the total amount paid for the car (including the down payment)

Answer 1

Cost of car = $31,210

Now we are given that you put down 15% of the car’s cost.

So, Down payment =
`15\% * 31210`

=
`(15)/(100) * 31210`

=
`4681.5`

So, Amount of car loan = Total cost - Down payment

Amount of car loan =$31210 - $4681.5

=$26528.5

Thus Amount of car loan is $26528.5

Now To find the total amount of car

Principal = $26528.5

Rate of interest = 4.5%

Time = 5 years

`A=P(1+r)^t`

`A=26528.5(1+(4.5)/(100))^5`

`A=33059.337533`

Total amount including down payment = $33059.337533+$4681.50 = $37740.837533

Hence the total amount paid for the car (including the down payment) is $37740.83