Question

Tommy Hayden decided to purchase a new moped on an installment loan. The moped was $1,500.00. He agreed to pay $150 a month for 12 months. What is the finance charge in dollars?

Answer 1

The first thing you need to get is the total of the amount you will deposit in 12 months. Tommy agreed to pay $150 every month in a span of 12 months. So $150 x 12 is equal to $1,800. The moped he purchased on an installment basis is only $1,500. So $1,800 - $1,500 is $300. The finance charge is $300.