logo for solving-math-problems.com
leftimage for solving-math-problems.com

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

Click here to add your own comments

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



Click here to add your own comments

Join in and write your own page! It's easy to do. How? Simply click here to return to Math Questions & Comments - 01.



Copyright © 2008-2015. All rights reserved. Solving-Math-Problems.com