Question

Carter bought a new car and financed $13,000

to make the purchase. He financed the car for 36
months with an APR of 3.5%
. Assuming he made monthly payments, determine the total interest Carter paid over the life of the loan. Round your answer to the nearest cent, if necessary.

Answer 1

Answer: $713.48

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Step-by-step explanation:

Let's calculate the monthly payment

• L = 13000 = loan amount
• i = interest rate per month in decimal form
• i = 0.035/12 = 0.0029167 approximately
• n = 36 months

P = monthly payment

P = (L*i)/(1 - (1+i)^(-n))

P = (13000*0.0029167)/(1 - (1+0.0029167)^(-36))

P = 380.927266693234

P = 380.93

Various online calculators can confirm this. Search out "monthly payment calculator".

Side note: The monthly payment formula is based off of the present value annuity formula.

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Carter pays $380.93 per month for 36 months.

He pays back a total of 380.93*36 = 13,713.48 dollars.

Subtract off the loan amount to determine the total interest.

13,713.48 - 13,000 = 713.48