Question

After my husband hit a buck and totaled my Mazda 5, I needed to buy a new car for $29,100. Fill in the monthly payment equation formula below with the correct information if I am taking out a 4-year loan with a $2,000 down payment and an annual interest rate of 4.7%.

Answer 1

To calculate the monthly payment for a car loan, use the formula: Monthly Payment = (Loan Amount - Down Payment) * Monthly Interest Rate / (1 - (1 + Monthly Interest Rate)^(-Number of Payments)). Plugging in the values, the monthly payment is approximately $635.32.

Step-by-step explanation:

To calculate the monthly payment for a car loan, we can use the formula:

Monthly Payment = (Loan Amount - Down Payment) * Monthly Interest Rate / (1 - (1 + Monthly Interest Rate)^(-Number of Payments))

In this case, the loan amount is $29,100, the down payment is $2,000, the annual interest rate is 4.7%, and the loan term is 4 years (48 months). To calculate the monthly interest rate, we divide the annual interest rate by 12 (the number of months in a year), which gives us 0.047 / 12 = 0.0039. Plugging in the values into the formula:

Monthly Payment = (29100 - 2000) * 0.0039 / (1 - (1 + 0.0039)^(-48))

Using a calculator, the monthly payment comes out to approximately $635.32.