Final answer:
The question involves calculating the total cost of a used Dodge Challenger that Ben purchased with a $7,000 down payment and monthly payments of $290 for 60 months. The question falls under high school level Mathematics and highlights the importance of understanding loan terms including the down payment, monthly payment, and loan duration when purchasing a vehicle.
Step-by-step explanation:
Understanding Car Payments
When Ben bought a used Dodge Challenger for $22,000, he made a down payment of $7,000 and agreed to pay $290 per month for 60 months. The affordability of a vehicle, whether new or used, frequently involves a loan and a down payment. The terms of the loan, including the monthly payment amount and the loan duration, are important to consider. In Ben's case, he chose to finance his vehicle over a period of 5 years, which is a common timeframe for auto loans.
It is essential to calculate the total cost of the loan, factoring in the interest rate and the total number of payments over the loan's term. For example, over the 60 months, Ben will pay a total of $17,400 in monthly payments ($290 x 60), plus his initial $7,000 down payment, making the total cost of the vehicle $24,400, assuming there is no interest. However, in a real situation, interest could significantly increase the total amount paid over the life of the loan.
In comparison, leasing a vehicle might offer lower monthly payments and a smaller down payment, but it has limitations such as mileage restrictions and may result in extra charges if those limits are exceeded. Understanding the financial implications of buying versus leasing, calculating the cost of a potential loan, and knowing how interest affects the total amount paid are all crucial in making an informed vehicle purchase decision.