Question

Bob is purchasing a Toyota Rav4 for $38,100. He has an older car for a trade-in. The dealer gives him $3000 for his trade-in. He negotiates an interest rate of 2.99. He finances the car for 5 years. What is his monthly payment?

Answer 1

Bob's monthly payment for the Toyota Rav4 is $653.85.

Step-by-step explanation:

To calculate Bob's monthly payment, we can use the formula for the monthly payment on a car loan:

P = (r * PV) / (1 - (1 + r)^(-n))

Where:
P = Monthly Payment
r = Interest Rate (per month)
PV = Present Value (loan amount)
n = Number of Payments

Plugging in the values:
PV = $38,100 - $3,000 (trade-in) = $35,100
r = 2.99 / 100 / 12 = 0.00249
n = 5 * 12 = 60

P = (0.00249 * $35,100) / (1 - (1 + 0.00249)^(-60))

P = $653.85

Therefore, Bob's monthly payment for the Toyota Rav4 is $653.85.