Question

If Brandon waited for 2 years to buy his car and put aside that $289.63 each month to add to his down payment, what would be his monthly payment on a 4-year loan at 12% interest?

The table outlines monthly payment per $1,000 for 2, 3, 4, 5, and 6-year loans at different interest rates. For 4-year loans at 12% interest rates monthly payments will equal $26.33 per $1,000 financed.




A. $96.92

B. $236.97

C. $263.30

D. $80.28

Answer 1

The total savings for the down payment is $6,951.12, and the formula to calculate the monthly payment of the loan after the down payment is to divide the loan amount by $1,000 and multiply by $26.33. The exact monthly payment cannot be determined without the car's total cost.

Step-by-step explanation:

First, calculate the total amount saved for the down payment over 2 years. Brandon saves $289.63 every month for 24 months, so the total savings is:

Down payment = 289.63 × 24 = $6,951.12.

This amount will be subtracted from the total cost of the car to find out how much needs to be financed. Assuming the cost of the car is not provided, we'll designate it as C. Thus, the loan amount L = C - $6,951.12.

The monthly payment per $1,000 for a 4-year loan at 12% interest rate is $26.33. Therefore, the total monthly payment M for the loan amount can be calculated by dividing the loan amount by $1,000 and then multiplying by $26.33:

Monthly payment = (Loan amount / $1,000) × 26.33.

Since the actual price of the car is not given, we cannot give a numeric answer, but we can provide the formula above that Brandon can use to calculate the monthly payment once he knows the price of the car.