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You (or your parents) purchase a new car for $19,725.00 plus 4.75% sales tax. The down payment is $2,175.00 and you (or your parents) have an average credit rating. How much interest is accrued after the first month?
Credit New Car APR
(%) Used Car APR (%)
Excellent 5.40 5.65
Good 5.95 6.35
Average 6.30 6.90
Fair 7.55 7.60
Poor 9.80 10.0
To calculate the total cost of the car after sales tax, we first need to find the sales tax amount:
Sales tax = $19,725.00 x 4.75% = $937.69
Total cost of the car after sales tax = $19,725.00 + $937.69 = $20,662.69
Next, we need to find the loan amount after the down payment:
Loan amount = Total cost of the car - Down payment
Loan amount = $20,662.69 - $2,175.00 = $18,487.69
Since the loan amount is $18,487.69, we now need to find the monthly interest accrued based on the given credit rating:
Interest Rate for Average Credit Rating: New Car - 6.30%
Monthly Interest = Loan amount x Monthly interest Rate
Monthly Interest = $18,487.69 x (6.30/100) = $1,166.04
Therefore, the interest accrued after the first month is $1,166.04.