Your credit card has a balance of $4300 and an annual interest rate of 17%. With no further purchases charged to the card and the balance being paid off over five years, the monthly payment is $107, and the total interest paid is $2120. You can get a bank loan at 9.5% with a term of six years
If you choose to take out a bank loan at 9.5% interest with a term of six years, you can calculate the monthly payment using the formula for calculating monthly loan payments:
Monthly Payment = (Loan Amount * Monthly Interest Rate) / (1 - (1 + Monthly Interest Rate)^-Number of Payments)
First, calculate the loan amount using the total balance and interest paid on your credit card:
Total Balance + Total Interest Paid = $4300 + $2120 = $6420
Next, calculate the monthly interest rate:
Annual Interest Rate / 12 = 17% / 12 = 1.42%
Now, calculate the monthly payment on the bank loan:
Loan Amount = $6420
Monthly Interest Rate = 9.5% / 12 = 0.79%
Number of Payments = 6 * 12 = 72 months
Monthly Payment = ($6420 * 0.0079) / (1 - (1 + 0.0079)^-72)
Monthly Payment ≈ $105.74
Therefore, the monthly payment on the bank loan would be approximately $105.74, which is slightly lower than the monthly payment on your credit card.