Question

You currently owe $20,000 on a car loan at 8.25 percent interest. If you make monthly payments of $596.59 per month, how long (i.e., number of months rounded to one decimal place) will it take you to fully repay the loan

Answer 1

The answer is: 36.2 months

Step-by-step explanation:

First, let us calculate the total amount to be repaid after interest has been added.

interest = 8.25% = 0.0825

interest in amount = 0.0825 × 20,000 = $1,650

Total amount to be repaid = Original amount + interest

= 20,000 + 1,650 = $21,650

Next, we are told that the repayment is made monthly at $596.59 per month, therefore number of months required to pay $21,650;

$596.59 = 1 month

∴ $21,650 = 21,650 ÷ 596.59 = 36.28 = 36.3 months ( to one decimal place)