A car dealer will sell you a used car for $6,298 with $798 down and payments of $165.51 per month for 48 months.
i found the total amount paid which is 8742.48
and interest paid is 2444.48
how do i find the interest rate?
So you were financing $5500 for 48 months with a monthly payment of $165.51
let the monthly interest rate be i
165.51( 1 - (1+i)^-48 )/i = 5500
This type of equation is very difficult to solve.
In the "olden days" we used methods such as interpolation to get approximate answers.
Now we have programs and webpages such as
Wolfram to do it for us.
http://www.wolframalpha.com/input/?i=solve+165.51%28+1+-+%281%2Bx%29%5E-48+%29%2Fx+%3D+5500
Notice I changed i to x , since Wolfram reads i as the complex number √-1
so i = .016137 for an annual rate of (.016137)(12)
or appr 19.36 % compounded monthly.
check:
165.51(1 - 1.016137^-48)/.016137
= 5499.996 , not bad
To find the interest rate, you can use the formula for calculating the interest rate on a loan. In this case, the formula is:
Interest Rate = (Interest Paid / Total Amount Paid) * (12 / Number of Months) * 100
Using the values given:
Interest Paid = $2,444.48
Total Amount Paid = $8,742.48
Number of Months = 48
Plug these values into the formula:
Interest Rate = (2,444.48 / 8,742.48) * (12 / 48) * 100
Calculating:
Interest Rate = (0.2797) * (0.25) * 100
Interest Rate = 6.9925
Therefore, the interest rate on this car loan is approximately 6.99%.
To find the interest rate for the car loan, you can use the following formula:
Interest Rate = (Interest Paid / Total Loan Amount) * 100
In this case, the interest paid is $2,444.48 and the total loan amount (or total amount paid) is $8,742.48.
Plugging these values into the formula:
Interest Rate = (2444.48 / 8742.48) * 100
Calculating the division:
Interest Rate = 0.2798 * 100
Final calculation:
Interest Rate ≈ 27.98%
Therefore, the interest rate for this car loan is approximately 27.98%.