Answer: To calculate the monthly payment for a car loan without a down payment, we can use the formula for calculating the monthly payment of a fixed-rate loan:
Monthly Payment = [P * r * (1 + r)^n] / [(1 + r)^n - 1]
where:
P = principal amount (loan amount)
r = monthly interest rate (annual interest rate divided by 12 and converted to a decimal)
n = total number of monthly payments (loan term in years multiplied by 12)
Let's calculate the monthly payment for the given car loan:
Loan amount (P) = $18,990
Annual interest rate = 3.95%
Monthly interest rate (r) = 3.95% / 12 = 0.0395 / 12 ≈ 0.0032917
Loan term = 6 years
Number of monthly payments (n) = 6 years * 12 months/year = 72 months
Now, let's plug these values into the formula:
Monthly Payment = [18990 * 0.0032917 * (1 + 0.0032917)^72] / [(1 + 0.0032917)^72 - 1]
Monthly Payment ≈ [18990 * 0.0032917 * (1.0032917)^72] / [(1.0032917)^72 - 1]
Monthly Payment ≈ [18990 * 0.0032917 * 1.273134] / 0.446215
Monthly Payment ≈ 25.613
So, the monthly payment for the car loan, without a down payment, would be approximately $25.61.