Jean-Claude Bubose will be the best man at his friend's wedding. To pay for plane fare, gifts, and other expenses, he took a $1,800 installment loan. The loan is for 12 months at 8% interest with a $156.60 monthly payment. After 8 months, the balance is $615.87 , and he pays off the loan when the next payment is due. a) What is the amount of the final payment? b) How much does he save by paying the loan off early?
a) To find the amount of the final payment, we need to first calculate the remaining balance after 8 months.
Remaining balance after 8 months = $615.87
Now, let's calculate the remaining balance after 9 months (since the loan term is for 12 months):
Remaining balance after 9 months = $615.87 - $156.60 = $459.27
So, the final payment would be $459.27.
b) To calculate how much he saves by paying off the loan early, we need to find the total amount he would have paid if he had continued with the monthly payments for the remaining 3 months.
Total amount paid in 12 months = $156.60/month x 12 months = $1,879.20
Total amount paid in 9 months = $156.60/month x 9 months = $1,409.40
Amount saved = Total amount paid in 12 months - Total amount paid in 9 months
Amount saved = $1,879.20 - $1,409.40
Amount saved = $469.80
Jean-Claude saves $469.80 by paying off the loan early.