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The Nguyen family buys a car for $32000, paying a deposit of $5000 and taking out a loan for the balance. If the loan is over 5 years and interest is charged at 1.5% monthly, find the amount of the monthly loan repayments. How much will the family pay for the car together?
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The car costs $32000 less the deposit $5000. The loan is $27000.
Use the formula: `P=(x[1-(1+i)^-n])/i`
P=27000, n=5 years x 12 months= 60, i=1.5% pm = 0.015.
Note, as interest is charged monthly, this infers compound interest
`therefore 27000= (x[1-(1+0.015)^-60])/0.015` Care not to round off too soon
`therefore (27000 times 0.015)/([1-(1.015)^-60])=x `
Remember to add the $5000 back to the instalments when calculating the total cost of the vehicle:
`$685.62 times 60 = 41137.20 + $5000`
Ans: The repayments are $685.62 per month and the total repayment therefore is $46 137.20
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