Using an online loan calculator, determine the total cost, fixed monthly payment, and the total interest paid when repaying an auto loan of $15,000 with a 5% interest rate compounded monthly and a 60-month loan term. Round the answers to the nearest dollar.(2 points)
To the nearest dollar, the total cost of repaying the loan is $
; the fixed monthly payment amount is $
; the total amount of interest paid is $
.
To calculate the total cost of repaying the loan, we first need to calculate the monthly payment amount. We can use the following formula:
M = P * (r * (1 + r)^n) / ((1 + r)^n - 1)
Where:
M = monthly payment
P = principal (loan amount)
r = monthly interest rate
n = number of payments (loan term in months)
P = $15,000
r = 5% / 100 / 12 = 0.00417 (monthly interest rate)
n = 60
M = 15000 * (0.00417 * (1 + 0.00417)^60) / ((1 + 0.00417)^60 - 1)
M ≈ $280.99
So the fixed monthly payment amount is approximately $281.
To calculate the total cost, we can multiply the monthly payment amount by the number of payments:
Total cost = M * n
Total cost = $280.99 * 60
Total cost ≈ $16,859.40
Therefore, the total cost of repaying the loan is approximately $16,859.
To calculate the total interest paid, we can subtract the principal from the total cost:
Total interest paid = Total cost - P
Total interest paid = $16,859 - $15,000
Total interest paid ≈ $1,859
So the total amount of interest paid is approximately $1,859.