Question

I just need to know how to figure it out and then I’m good. I don’t quite understand my book’s instructions. Thank you

Cash price: $9,800
Down payment: $3,000
Monthly payment: $221.50
Number of payments: 36
Installment charge: ?

Answer 1

To figure out the installment charge, we need to calculate the total amount paid over the duration of the loan and subtract the financed amount (the cash price minus the down payment). Here's how you can calculate it:

1. Calculate the financed amount:

Financed amount = Cash price - Down payment

Financed amount = $9,800 - $3,000

Financed amount = $6,800

1. Calculate the total amount paid over the duration of the loan:

Total amount paid = Monthly payment * Number of payments

Total amount paid = $221.50 * 36

Total amount paid = $7,974

1. Calculate the installment charge:

Installment charge = Total amount paid - Financed amount

Installment charge = $7,974 - $6,800

Installment charge = $1,174

Therefore, the installment charge in this case would be $1,174.