Question

The BMW 650i Cabriolet sells for $131,080 (tax included). BMW financial services offers a five (5) year loan (with monthly payments) and the option of a final "balloon" payment at the end of the five year term. BMW charges 2.0% per annum. How big does the balloon payment have to be in order for your monthly payments to be $1,000?

Answer 1

The balloon payment on a BMW 650i Cabriolet with $1,000 monthly payments and a 2.0% interest rate should be around $35,691.

Step-by-step explanation:

The balloon payment on the BMW 650i Cabriolet should be calculated based on the loan amount, interest rate, and monthly payments. Here's how:

1. First, calculate the loan amount by subtracting the down payment from the total price of the car. Let's say the down payment is $10,000, so the loan amount is $131,080 - $10,000 = $121,080.
2. Next, determine the monthly interest rate by dividing the annual interest rate by 12. In this case, the monthly interest rate is 2.0% / 12 = 0.1667%.
3. Now, use the loan amount, interest rate, and monthly payments to calculate the balloon payment using an amortization formula or an online loan calculator. Assuming a loan term of 5 years (60 months), the monthly payment is $1,000, and the interest rate is 0.1667%, the balloon payment would be approximately $35,691.

Therefore, in order for your monthly payments to be $1,000, the balloon payment should be around $35,691.