Question

Christina bought a new car for $32,000

. She paid a 20%
down payment and financed the remaining balance for 60
months with an APR of 5.5%
. Determine the monthly payment that Christina pays. Round your answer to the nearest cent, if necessary.

Answer 1

The monthly payment that Christina pays for her car loan is approximately $499.25.

Step-by-step explanation:

To determine the monthly payment that Christina pays, we need to calculate the loan amount and interest rate based on the down payment and financing. The down payment is 20% of $32,000, which is $6,400. So, the loan amount is $32,000 - $6,400 = $25,600. The monthly interest rate is (5.5% / 12) = 0.00458, and the number of months is 60.

Using the formula for calculating the monthly payment on a loan:

Monthly Payment = (Loan Amount x Monthly Interest Rate) / (1 - (1 + Monthly Interest Rate)^(-Number of Months))

Plugging in the values, we get:

Monthly Payment ≈ ($25,600 x 0.00458) / (1 - (1 + 0.00458)^(-60))

Calculating this using a calculator, the monthly payment that Christina pays is approximately $499.25.