Question

Suppose you see a car advertised with a price of $33,150 and payments of $590.35 per month for 5 years. What is the amount of interest paid?

Answer 1

The amount of interest paid on the car loan is $2,271.

Explanation:

To calculate the amount of interest paid on a car loan, we need to know the total cost of the car and the total amount of payments made over the life of the loan.

First, let's calculate the total cost of the car. We are given that the advertised price is $33,150, but we don't know if any fees or taxes are included. Let's assume for now that this is the total cost of the car.

Next, let's calculate the total amount of payments made over the life of the loan. We know that the monthly payment is $590.35 and the loan term is 5 years, or 60 months. So the total amount of payments made over the life of the loan is:

$590.35/month * 60 months = $35,421

Now we can calculate the amount of interest paid by subtracting the total cost of the car from the total amount of payments made:

$35,421 - $33,150 = $2,271

Therefore, the amount of interest paid on the car loan is $2,271.