Help with this car payment math problem please!!!?find a used car to buy, and figure out the costs of buying this car by filling in the blanks below. You don't have enough money for a down payment,...

Help with this car payment math problem please!!!?

find a used car to buy, and figure out the costs of buying this car by filling in the blanks below. You don't have enough money for a down payment, and your credit history is so new that you have to get a five-year loan with an interest rate of 10% to make the purchase.

 

Make/Model:

 

Asking price:

 

Sales tax:

 

Total cost:

 

Monthly payment:

 

Total interest paid:

 

Total payments:

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sirlsalum8's profile pic

sirlsalum8 | (Level 1) eNoter

Posted on

So, we decide to purchase a 2010 Pontiac Vibe 4D Wagon, because it is equipped with a dependable Toyota manufactured engine. The car can be found on Carmax.com being sold at a store in Tucson, AZ.

The asking price for the car is $14,988 excluding sales tax.

Sales tax in AZ is 6% and in Tucson 2.1%. Therefore, the total sales tax applied will be 8.1% of $14,988 or 0.081 x $14,988, which is $1,214.03.

We then add the asking price to the sales tax to get the total cost of the car, which is $16,202.03.

We know that we’re going to be making monthly payments at an annual interest rate (APR) of 10% over five years. There are 12 months in a year, so we know that we will be making a total of 60 payments.

Here is the formula for calculating the monthly payments:

P ( r / 12 ) ------------------------- -m (1 - ( 1 + r / 12 ) )

Where,

  • P = principal amount (initial investment)
  • r = interest rate (as a decimal)
  • m = number of monthly payments

In our example, a five year (60 month) loan of $16,202.03 at 10% interest would look like this:

16,202.03 ( 0.1 / 12 ) ------------------------- -60 (1 - ( 1 + .1 / 12 ) )

The monthly payment for this car will be: $344.25.

Finally, to see the total interest paid, you'll need to multiply the monthly payment ($344.25) by the total payments (60) and then subtract the total cost ($16,202.03).

$344.25 x 60 = $20,655 - $16,202.03 = $4,452.97.

So, you paid $4,452.97 in interest.

I hope this helped and shows you that you should always make a down payment, if you can.

Form

Make/Model: 2010 Pontiac Vibe 4D Wagon

Asking price: $14,988

Sales tax: $1,214.03

Total cost: $16,202.03

Monthly payment: $344.25

Total interest paid: $4,452.97

Total payments: 60

Sources:

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