Question

Which is the better deal 0% interest on a $28,300 car or purchasing a $22,000 vehicle with a five-year 6% simple interest loan

Answer 1

0% interest on a $28,300 car is a better deal.

Explanation:

Compare the total amount to be paid for each option;

Option1 : 0% interest on a $28,300 car

• You will pay a total of 28,300 since there is $0 payable on interest

Option 2: $22,000 vehicle with a five-year 6% simple interest loan

Find the Amount; A=Simple Interest + Principal

Simple Interest = Principal* rate * time = (22000* 0.06 *5) = 6600

Amount payable= 22,000+6,000= $28,600

Therefore,0% interest on a $28,300 car is a better deal.