Question

A certain car sells for $20,000, if it is paid for in

full (the cash price). However, the car can be
financed with a 10% down payment and
monthly payments of $1,000 for 24 months.
How much more money is paid for the privilege of financing, excluding tax, and what percent is this of the car’s cash price?

Answer 1

$6,000 or 30% more is paid for financing

Explanation:

The total of payments when the car is financed is ...

10%×$20,000 +24×$1000 = $2,000 +24,000 = $26,000

The difference from the cash price is ...

$26,000 -20,000 = $6,000

The percentage this difference is of the cash price is ...

$6,000/$20,000 × 100% = 30%