Question

Cheri took out a loan for $14,350. The loan term was 3 years and Cheri’s payments were $625.77 per month. Since Cheri had filed for bankruptcy several years prior, she ended up paying a higher interest rate. With a better credit rating, her payments could have been $431.21 per month. How much more in interest did Cheri end up paying for her loan because of her bankruptcy? a. $5,836.80 b. $2,334.72 c. $8,624.16 d. $7,004.16

Answer 1

First we want to calculate total payments of each payment in order to find the interest. After that calculate the difference to get the answer

Total payments of 625.77
625.77×12months×3 years
=22,527.72
Interest paid
22,527.72−14,350
=8,177.72

Total payments of 431.21
431.21×12months×3 years
=15,523.56
Interest paid
15,523.56−14,350
=1,173.56

So how much more in interest did Cheri end up paying for her loan because of her bankruptcy
8,177.72−1,173.56
=7,004.16...answer

Hope it helps!

Answer 2

(D) $7,004.16

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