Joe is purchasing a new truck for $30,000. Joe is making a $2,000 down payment, and he will make 60 monthly payments of $541 each. What are the total finance costs on this loan?
(60 * 541) - 28,000 = ?
To find the total finance costs on this loan, we need to calculate the amount financed and then subtract the down payment from it. After that, we can calculate the interest paid over the course of the loan.
1. First, let's calculate the amount financed, which is the total cost of the truck minus the down payment:
Amount Financed = Cost of the truck - Down payment
Amount Financed = $30,000 - $2,000
Amount Financed = $28,000
2. Next, let's calculate the interest paid over 60 monthly payments of $541 each. The monthly payment includes both the principal (the amount financed) and the interest.
Total Payments = Monthly Payment * Number of Payments
Total Payments = $541 * 60
Total Payments = $32,460
3. Finally, we can calculate the total finance costs by subtracting the amount financed from the total payments:
Total Finance Costs = Total Payments - Amount Financed
Total Finance Costs = $32,460 - $28,000
Total Finance Costs = $4,460
Therefore, the total finance costs on this loan amount to $4,460.