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finance

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Richard likes the car price of $10,000 but financing through the dealer is no bargain.He has $2,000 for a down payment,so he needs $8,000 for the loan.Richard borrows $8000 for a period of four years at an add on intrest rate of 11 %.What is the total intrest on the loan?What is the total cost on the car?What is the monthly payment?what is the apr?

  • finance -

    $8000 add on interest rate of 11%

    8000 x .11 = 880 add on interest/yr
    880/yr x 4/yrs = 3520
    3520/2 = 1760

    1760 total interest on loan
    1760 add on interest added to principal

    8000 principal + 1760 towards principal
    = 9760 total loan principal

    9760/48 mo = 203.33/month payment

    APR % = (APR x no. yrs)/2
    APR % = (11 x 4)/2 = 44/2 = 22%

    Total car cost
    8000 orig loan
    1760 add on interest towards principal
    1760 loan interest
    11520 sub total
    2000 down payment
    13520 total cost of car

    1760 interest/8000 loan = .22 = 22% APR

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