Question

So you want to finance a car for $4,840. Let’s say we offer you a 4.5% interest rate on a 2-year loan and 6% on a 5-year loan. Enter this info into the calculator to see your monthly and total cost by loan term.

Financing Amount
$4840
Correct
Interest Rate on 2-Year Loan
Interest Rate on 5-Year Loan

Answer 1

To calculate the monthly and total cost of financing a car, we need to use a loan payment formula.

Step-by-step explanation:

To calculate the monthly and total cost of financing a car, we need to use the formula for calculating the monthly payment on a loan. For the 2-year loan with a 4.5% interest rate, we can use the formula:

Monthly Payment = (Financing Amount x Interest Rate x (1 + Interest Rate)^Loan Term) / ((1 + Interest Rate)^Loan Term - 1)

For the 5-year loan with a 6% interest rate, we can use the same formula but with a longer loan term.

By plugging in the values, we can calculate the monthly and total cost for both loan terms.