Find the amount of interest and the monthly payment for the loan. Purchase a car for $42,800 at 2.4% 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 follow these steps:
Step 1: Convert the add-on rate to an annual interest rate.
The add-on rate represents the percentage of the loan amount that is added to the total loan cost. To convert it to an annual interest rate, divide it by the number of years for the loan. In this case, the add-on rate is 2.4% for 5 years. So, the annual interest rate can be calculated as 2.4% / 5 = 0.48%.
Step 2: Calculate the total interest paid over the loan term.
To find the interest amount, we need to multiply the loan amount by the annual interest rate. In this case, the loan amount is $42,800 and the annual interest rate is 0.48%. So, the total interest can be calculated as: $42,800 * (0.48/100) = $205.44.
Step 3: Calculate the monthly payment.
To find the monthly payment, we can divide the total loan amount (including interest) by the total number of months in the loan term. In this case, the loan term is 5 years, which is equivalent to 5 * 12 = 60 months. So, the monthly payment can be calculated as ($42,800 + $205.44) / 60 = $714.25.
Therefore, the amount of interest for the loan is $205.44 and the monthly payment is $714.25.