You have seen an online ad for a 2017 Honda Accord with an MSRP of$35,200. You negotiate with the salesman and settled on a selling price of$32,830 plus South Carolina sales tax ($300 for all cars). You also have to make a down payment of at least 7%. You go to the finance officer and get a loan at 3.59% interest for five years.
You decide to make a 10% down payment and only want to finance the car above for four years.
a. How much money do you have to finance (Loan amount)?
b. What is your monthly payment?
c. How much are your total payment over these four years?
d. How much interest would you pay over these four years?
The down payment on a purchase is a certain dollar amount that is provided at the time of the sale. The remaining amount of the purchase price is typically financed with a loan.
Answer and Explanation: 1
The loan amount is the price plus sales tax minus the down payment:
- Loan amount = (Selling price + Sales tax) * (1 - down payment percentage)
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