Question

The salesman agrees to a purchase price of $16,000. Henry has $3,000.00 saved and will get $2,000.00 as a trade-in for his current vehicle. Henry has great credit and will finance at a 3.25% interest rate over 60 months. Using this calculator, what will Henry's monthly payment on this loan be?

Answer 1

$198.88

Step-by-step explanation:

The total value of vehicle that the salesman has offered and agreed = $16,000

The down payment that Henry can make at the time of purchase = $3,000

Now the trade in amount, which Henry will get by trading his old vehicle = $ 2,000

The amount that needs to be paid or converted to loan would be

= 16000 – 3000 – 2000

= 11000

Henry has to take a loan of $11000 from the Bank who is offering a loan at interest rate of 3.25%.

Interest on loan for first year be = 3.25% x 11000 = 327

Interest on loan for 2nd year be = 3.25% x 8940 = 259

Interest on loan for 3rd year be = 3.25% x 6812 = 189

Interest on loan for 4th year be = 3.25% x 4615 = 116

Interest on loan for Last year be = 3.25% x 2345 = 41

Summing them up gives total value of 932.

Now monthly payement = (11932 / 60) = 198.8