Question

The premier car title loan company makes emergency loans of up to $500 for 1 month for a fee of 4% of the loan amount. If a person borrows $500, what:

a) Is the total repayment amount?
b) Is the interest charged?
c) Is the additional fee besides interest?
d) Is the final cost with interest and fee included?

Answer 1

The total repayment amount for a $500 loan with a 4% fee is $540.

Step-by-step explanation:

The total repayment amount can be calculated by adding the loan amount to the interest charged to the additional fee. In this case, the loan amount is $500, the interest charged is 4% of $500, which is $20, and the additional fee is also $20. Therefore, the total repayment amount is $500 + $20 + $20 = $540.

The interest charged can be calculated by multiplying the loan amount by the interest rate. In this case, the loan amount is $500 and the interest rate is 4%, so the interest charged is 4% of $500, which is $20.

The additional fee besides interest is also $20, as mentioned above.

The final cost with interest and fee included is the total repayment amount, which is $540.