Answer:
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.