Question

Dagmar has a 4-year car loan at an annual interest rate of 5.5%. She has made 28 payments of $975.77. If Dagmar decides to pay off her loan, what is her payoff amount (in dollars)? (Round your answer to the nearest cent.)

Answer 1

If Dagmar decides to pay off her loan, her payoff amount (in dollars) is $29,081.20.

The payoff amount equals the future value of the car loan after making 28 payments of $975.77.

This future value can be computed using an online finance calculator as follows:

N (# of periods) = 28 months

I/Y (Interest per year) = 5.5%

PV (Present Value) = $0

PMT (Periodic Payment) = $975.77

Results:

FV (Future Value) = $29,081.20

The sum of all periodic payments = $27,321.56

Total Interest = $1,759.64

Thus, to pay off the loan, Dagmar must pay $29,081.20 after the 28th monthly payment.