Question

Hazel’s monthly car payment is $283.16 with an APR of 2.8 percent. If $14.525 is financed, calculate Hazel’s first interest and principal payments.

Answer 1

Hazel's first interest payment on her car loan is $33.89, and the principal payment is $249.27, calculated by using the APR and the total amount financed.

Step-by-step explanation:

To calculate Hazel's first interest and principal payments on her car loan, we will need to use the APR and the amount financed.

First, we find the monthly interest rate by dividing the APR by 12 months.

Then, we calculate the first interest payment by multiplying the monthly interest rate by the total amount financed. Afterward, we can find the first principal payment by subtracting the first interest payment from the total monthly payment.

Let's start by finding the monthly interest rate:

Monthly Interest Rate = APR / 12

Monthly Interest Rate = 2.8% / 12

= 0.2333%

Now, we calculate the first interest payment:

First Interest Payment = Monthly Interest Rate * Amount Financed

First Interest Payment = 0.2333% * $14,525 = $33.89 (rounded to two decimal places)

Finally, we determine the principal payment:

Principal Payment = Monthly Payment - First Interest Payment

Principal Payment = $283.16 - $33.89

= $249.27

Thus, Hazel's first interest payment is $33.89 and her principal payment is $249.27.