Question

You are getting a personal loan for $7,500 at 8.3% APR that you are going to pay back over 10 years. What is the total that you will pay?

Answer 1

The overall payment is $13725.

Solution:

Given, You are getting a personal loan for $7,500 at 8.3% APR that you are going to pay back over 10 years.

We have to find what is the total that you will pay?

Now, we need to follow the below procedure to calculate monthly payments.

Convert the annual rate from percentage to decimal format (by dividing by 100)

→
`(8.3)/(100)` = 0.083 annually

Now, Divide the annual rate by 12

`(0.083)/(12) = 0.0069`

Then, Calculate the monthly interest on $7,500

0.0069 x 7,500 = $51.875

Now, loan amount to be paid per month is total amount divided by time span

`(7500)/(10 * 12)=62.5`

So, the monthly payments = monthly loan payments + monthly interest = 51.875 + 62.5 = $114.375

Now, overall payment = monthly payment
`*` 12 months per year
`*` 10 years = 114.375
`*` 12
`*` 10 = $13725.

Hence, the overall payment is $13725