Question

Jane is buying a new sports car for $68,000. The dealer is providing financing at an annual rate of 15% using the add-on method. If Jane wants to pay off the car in 3 years, what will

her monthly payment be?
(Round to the nearest cent

Answer 1

$2,738.89/per month

Explanation:

this is a loan shark. 15% is robbery.

The Add on Method is an alternative method of paying interest after it is added onto the principal at maturity. In this method, the interest on the loan is calculated annually and multiplied by the number of years left for repayment.

Calculate the annual interest: Multiply the interest rate by the amount you originally borrowed: 15% x $68,000 = $10,200.

Calculate the add-on interest amount: Multiply the annual interest amount by the number of years in the loan: $10,200 x 3 years = $30,600.

so total she'll have to pay over 3 years = 98600

98600/36 months = 2738.89/per month