Find the amount of interest and the monthly payment for the loan. Purchase a car for $42,700 at 2.9% add-on rate for 5 years. (Round your answers to the nearest cent.)
To find the amount of interest and the monthly payment for the loan, we can use the formula for add-on interest. The formula is:
Interest = Principal x Rate x Time
First, we need to find the interest amount. The principal is the purchase price of the car, which is $42,700. The rate is given as 2.9% or 0.029. The time is 5 years. Plugging these values into the formula, we get:
Interest = $42,700 x 0.029 x 5 = $6,213.55
So, the amount of interest for the loan is $6,213.55.
To find the monthly payment, we need to add the interest amount to the principal and divide it by the total number of months in the loan term. Since the loan term is 5 years, or 60 months, we can calculate the monthly payment as follows:
Total loan amount = Principal + Interest = $42,700 + $6,213.55 = $48,913.55
Monthly payment = Total loan amount / Number of months = $48,913.55 / 60
Using a calculator, the monthly payment is approximately $815.23.
Therefore, the monthly payment for the loan is approximately $815.23.