Question

John takes a car loan for $18,000. The loan is for 36 months and has an interest rate of 2.5%. There are additional $500 of fees. What is the APR for this loan?

Answer 1

The APR for this loan is 2.78%.

Step-by-step explanation:

To find the APR for this loan, we need to take into account both the interest rate and the fees. The formula for calculating APR is:

APR = (Annual Interest + Fees) / Loan Amount * 100

Let's plug in the values:

Loan Amount = $18,000
Annual Interest = 2.5%
Fees = $500

APR = (0.025 + 500/18000) * 100 = 2.78%

Therefore, the APR for this loan is 2.78%.