Question

You want to buy a $ 24,000.00 car. You can make a 10 % down payment, and will finance the balance with a 5 % interest rate for 36 months (3 years). What will your monthly payment be?

Answer 1

To calculate the monthly payment on a car loan, use the formula: Monthly Payment = (Loan Amount × Monthly Interest Rate) / (1 - (1 + Monthly Interest Rate)^(-Number of Months)). Plugging in the values, the monthly payment on this car loan is $645.62.

Step-by-step explanation:

To calculate the monthly payment on a car loan, we need to use the formula:

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

First, we need to calculate the loan amount after the down payment. The down payment is 10% of $24,000, which is $2,400. So, the loan amount is $24,000 - $2,400 = $21,600.

The monthly interest rate is 5% divided by 12 (months), which is 0.05 / 12 = 0.00417.

The number of months is 36.

Plugging these values into the formula, we get:

Monthly Payment = ($21,600 × 0.00417) / (1 - (1 + 0.00417)^(-36)) = $645.62

Therefore, your monthly payment will be $645.62.