Note: Enter your answer and show all the steps that you use to solve this problem in the space provided.
You (or your parents) purchase a used car for $15,867.00 plus 5.25% sales tax. The down payment is 10% of the total cost and you (or your parents) have an excellent credit rating. What is your principal balance at the start of the loan?
Step 1: Calculate the total cost of the car including sales tax.
Total cost = $15,867.00 + ($15,867.00 * 5.25%)
Total cost = $15,867.00 + $834.14
Total cost = $16,701.14
Step 2: Calculate the down payment amount.
Down payment = 10% of total cost
Down payment = 0.10 * $16,701.14
Down payment = $1,670.11
Step 3: Calculate the principal balance at the start of the loan.
Principal balance = Total cost - Down payment
Principal balance = $16,701.14 - $1,670.11
Principal balance = $15,031.03
Therefore, the principal balance at the start of the loan is $15,031.03.