Question

Colin bought a new car and financed $12,000 to make the purchase. he financed the car for 72 months with an apr of 6.5% . assuming he made monthly payments, determine the total interest colin paid over the life of the loan. round your answer to the nearest cent, if necessary.

Answer 1

To determine the total interest Colin paid on his car loan, one must calculate the monthly payment using a financial calculator and then multiply it by 72 months to find the total amount paid, and subtract the principal to get the total interest.

Step-by-step explanation:

Colin financed a new car by taking out a loan of $12,000 with an annual percentage rate (APR) of 6.5%. To calculate the total interest paid over the life of the 72-month loan, we can use the amortization formula to find the monthly payment first, and then determine the total amount paid over the life of the loan. However, the direct calculation or formula for the amortized monthly payment isn't provided in the text above, so we need to use a financial calculator or a similar tool to find the monthly payment.

Once we have the monthly payment, we multiply that by the number of payments (72) to find the total amount paid over the life of the loan. Subtracting the original loan amount ($12,000) from the total amount paid will give us the total interest paid on the loan.

Here's a concise step-by-step approach to solving this problem:

1. Calculate monthly interest rate: APR / 12.
2. Calculate monthly payment using the loan amount, monthly interest rate, and the number of payments.
3. Multiply the monthly payment by the number of months (72) to get the total amount paid.
4. Subtract the loan amount from the total amount paid to find the total interest.

As we lack the specific monthly payment calculation in this scenario, the exact total interest cannot be determined without the inclusion of a financial calculator or software to compute it. The solution would be provided if such tools were used.