Question

Suppose you went car shopping last week and discussed auto loans with your car dealer. Then, you shopped around online at several area banks and found an auto loan with a much lower APR than what your car dealer had offered. Your monthly auto loan payment is now $200 for 60 months. If you had gone with the car dealer's offer, it would have been $225 for 60 months. How much money will you save with the new loan over the next five years?

Answer 1

The extra amount he has to pay is $1500

Explanation:

The person first checked loan payment with a car dealer and later found out that the loan offered online was cheaper.

We have to find how much amount of money he will save over the next 5 years.

When he went to a online car dealer , he was told that the loan amount he has to pay is $200 per month for 60 months or 5 year.

This amounts to
`P_(1)` =
`200 * 60`

= $12000

When he approached car dealer in person , he was told to pay $225 per month for 5 years.

This amounts to
`P_2` =
`225 * 60`

= $13500

The extra amount he has to pay is $13500 - $12000

=$1500