I am looking at buying a new Camry. I think I can talk them down to $19,000. If the bank is willing to finance it for 60 months at 3.75%, what would my monthly payment be?
To calculate the monthly payment on a loan, you would need to use the formula for a loan payment:
Monthly Payment = (Loan Amount * Monthly Interest Rate) / (1 - (1 + Monthly Interest Rate) ^ -Number of Payments)
In this case, the loan amount is $19,000, the monthly interest rate is 3.75% divided by 100, and the number of payments is 60 months.
So, first, we need to convert the annual interest rate to a monthly interest rate. To do that, divide the annual interest rate by 12:
Monthly Interest Rate = 3.75% / 12
Next, we need to convert the monthly interest rate to a decimal:
Monthly Interest Rate = (3.75% / 12) / 100
Next, we can substitute the values into the formula:
Monthly Payment = ($19,000 * (3.75% / 12)) / (1 - (1 + (3.75% / 12)) ^ -60)
Now we can calculate the monthly payment using this formula:
Monthly Payment = ($19,000 * 0.003125) / (1 - (1 + 0.003125) ^ -60)
Simplifying this equation gives us:
Monthly Payment = $57.81
Therefore, your monthly payment would be approximately $57.81 for a $19,000 loan financed over 60 months at an interest rate of 3.75%.