Question

You want to buy a new sports coupe for $75,500, and the finance office at the dealership has quoted you a loan with an APR of 7.9 percent for 72 months to buy the car. Effective Annual Rate is 8.14.

What will your monthly payments be?

Answer 1

Loan amount (P): $75,500

Annual Percentage Rate (APR): 7.9%

Loan term (n): 72 months

Monthly interest rate = APR / 12 = 7.9% / 12 = 0.0079

M = P * (r * (1+r)^n) / ((1+r)^n - 1)

M = 75500 * (0.0079 * (1+0.0079)^72) / ((1+0.0079)^72 - 1)

$1,217.17