You (or your parents) purchase a used car for $15,876.00 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?
$20.95?
To determine the principal balance at the start of the loan, you need to consider the total cost of the car, the down payment, and the sales tax. Let's break it down step by step:
1. Calculate the sales tax amount: Multiply the purchase price of the car ($15,876.00) by the sales tax rate (5.25%).
Sales tax = $15,876.00 * 5.25% = $833.37
2. Add the sales tax to the purchase price to get the total cost:
Total cost = Purchase price + Sales tax
Total cost = $15,876.00 + $833.37 = $16,709.37
3. Calculate the down payment: Multiply the total cost by the down payment percentage (10%):
Down payment = Total cost * 10%
Down payment = $16,709.37 * 10% = $1,670.94
4. Finally, calculate the principal balance at the start of the loan by subtracting the down payment from the total cost:
Principal balance = Total cost - Down payment
Principal balance = $16,709.37 - $1,670.94 = $15,038.43
Therefore, the principal balance at the start of the loan is $15,038.43.