Question

You wish to borrow $8000 for debt consolidation. The bank's interest rate for a personal loan is 7.2%. What is your monthly payment if you want to pay off the loan in 3 years?

Answer 1

The monthly payment is $242.44 for loan to paid off in 3 years.

Explanation:

The amount borrowed = Principal = $8000

The rate of interest = 7.2%

Time (T) = 3 years

Now, Simple Interest =
`(P* R * T)/(100)`

`\implies SI = (8000 * 7.2 * 3)/(100) = 1,728`

So, the total interest = $1728

Now, Amount to be paid = Principal + Interest

⇒ A = $8000 + $1728 = $8728

Also, 1 year = 12 months

⇒ 3 years = 3 x 12 months = 36 months

So, total amount to be paid in 36 months is $8728.

⇒The amount to be paid in 1 month is
`((8728)/(36) ) = 242.44`

Hence, the monthly payment is $242.44 if loan is to paid off in 3 years.