1.9k views
3 votes
You can afford a $200 per month car payment. You've found a 4 year loan at 6% interest. How big of a loan can you afford?

User Robmzd
by
8.5k points

1 Answer

5 votes

If you can afford a $200 monthly payment for a loan of 6% interest for 4 years, the loan's present value can be as big as $8,500.

How the present value is determined:

We can determine the present value using an online finance calculator as follows:

N (# of periods) = 48 months (4 years x 12)

I/Y (Interest per year) = 6%

PMT (Periodic Payment) = $200

FV (Future Value) = $0

Results:

PV = $8,500

Sum of all periodic payments = $9,600

Total Interest = $1,100

Thus, you can afford a loan of $8,500 with the monthly payment for 4 years.

User Ten Sleep
by
8.4k points

No related questions found

Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

9.4m questions

12.2m answers

Categories