# installments

Alex bought a car for 23000. Alex put down 6000 dollars and paid 305 for 60 months? what will be my finance charge at the end for 60 months?

### Comments for installments

 Dec 15, 2010 Finance Charges – Installment Loans by: Staff The question: Alex bought a car for 23000. Alex put down 6000 dollars and paid 305 for 60 months? What will be my finance charge at the end for 60 months? The answer: Since Alex put \$6,000 down on the car, he will be repaying a loan of \$17,000 (\$23,000 – 6,000 = \$17,000) Alex will be paying \$305 per month for 5 years (60 months) Although you did not say, I assume Alex will repay the entire \$17,000 in 60 months. There are a couple of ways to attack this problem: 1) Use a spread sheet (eg: excel) 2) Use a financial calculator I used the financial calculator provided by State Farm. It is located here: http://www.statefarm.com/learning/calc/carloan.asp IMPORTANT: Since the interest rate is not stated in your problem, you must DETERMINE THE INTEREST RATE by TRIAL AND ERROR. Enter the following information in the calculator: number of payments: 60 principle amount: 17,000 use trial and error to determine interest rate so that the monthly payment will = \$303.00: using trial and error, I determined the interest rate to be 2.673% This interest rate will result in a monthly payment of exactly \$303.00 The calculator calculated your total interest payments over the life of the loan (60 months) to be: \$1180.00 The final answer to your question is: \$1,180 in finance charges Thanks for writing. Staff www.solving-math-problems.com

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