Question

PLEASE ANSWER HONESTLY AND WITH FULL EXPLANATION

Jade bought a car for $21,400 at an APR of 3.6%, compounded monthly, by agreeing to make monthly payments of $149.00 for 48 months. After 48 months, Jade plans to make a balloon payment. Usually, the monthly payment on a 48-month loan for $21,400 at an APR of 3.6%, compounded monthly, is $479.37. Jade is wondering how much more expensive the balloon payment option is. Let's do some calculations to find out.

Part I: How much will Jade have paid after 48 months with a monthly payment of $149.00?

Part II: What will Jade's balloon payment be?

Part III: How much in total will Jade have paid after making the balloon payment?

Part IV: How much would Jade have paid in total if she had made the usual payment of $479.37 for 48 months?

Part V: How much more expensive was the balloon payment option for Jade than if she had just made the usual payment of $479.37 for 48 months?

Answer 1

Part I: Jade will have paid $7,152.00 after 48 months with a monthly payment of $149.00. Part II: Jade's balloon payment will be $14,248.00. Part III: After making the balloon payment, Jade will have paid the total cost of the car, which is $21,400.

Step-by-step explanation:

Part I: To calculate how much Jade will have paid after 48 months with a monthly payment of $149.00, we can multiply the monthly payment by the number of months. So, $149.00 x 48 = $7,152.00. Jade will have paid $7,152.00 after 48 months.

Part II: The balloon payment is the remaining amount that Jade needs to pay after the 48 monthly payments. To calculate the balloon payment, we subtract the amount paid after 48 months ($7,152.00) from the total cost of the car ($21,400). So, $21,400 - $7,152.00 = $14,248.00. Jade's balloon payment will be $14,248.00.

Part III: After making the balloon payment, Jade will have paid the total cost of the car. So, the total amount Jade will have paid is $21,400.

Part IV: If Jade had made the usual payment of $479.37 for 48 months, the total amount she would have paid can be calculated by multiplying the monthly payment by the number of months: $479.37 x 48 = $23,053.76.

Part V: To determine how much more expensive the balloon payment option is compared to the usual payment, we subtract the total amount Jade would have paid with the usual payment ($23,053.76) from the total amount she will pay with the balloon payment ($21,400). So, $21,400 - $23,053.76 = -$1,653.76. The balloon payment option is $1,653.76 less expensive than the usual payment option.