Question

Thomas borrowed 4800$ to buy a new car. He will be paying 96$ a each month for the next 60 months. Find the simple interest rate for his car loan.

Answer 1

The Rate at which car is loaned is 4 % .

Explanation:

Given as ;

The amount borrowed by Thomas to buy new car = $ 4800

The time period = 60 months = 5 years

The Amount paid per months = $ 96 × 60 = $ 5760

Let The rate of interest applied = R % simple interest

So, Simple - Interest = Amount - principal

Or, Simple - Interest = $ 5760 -$ 4800 = $ 960

So, From Simple Interest method

Simple Interest =
`(\textrm Principal * \textrm Rate * \textrm Time)/(100)`

Or, $ 960 =
`(\textrm 4800 * \textrm R * \textrm 5)/(100)`

or, 960×100 = 24000 × R

∴ R =
`(96000)/(24000)` = 4 %

Hence The Rate at which car is loaned is 4 % . Answer