Question

2. Rhianna is buying a car for $14,390. She has a $1000 trade-in allowance and will make a $1500 down payment. She will finance the rest with a 4-year auto loan at 2.6% APR.

Answer 1

Answer: Her payment will be $261

To find this value, you just need to start with the numbers that you know.

First, find the cost of the loan. 14390 - 1000 - 1500 = 11890
We have to subtract her down payment and trade in allowance.

Then, we need the rate of 2.6%

Finally, the term of the loan is 4 years or 48 months.

Simply plug these values into your equation or use an online calculator. There are numerous ones you can find online.

Answer 2

$261.08

Explanation:

Worth of Car=$14,390

Trade-in allowance=$1000

Down Payment= $1500

Value of Loan=14390-(1000+1500)

=$11890

The Monthly Payment for a loan P, taken at a Monthly interest rate, r for a number of m months, is gotten using the formula:

[TeX] Monthly\:Payment=\frac{rP}{1-(1+r)^{-m}} [/TeX]

P=$11890

Monthly Interest Rate,r=0.026/12=0.002167

Number of Months, m=4*12=48 Months

[TeX] Monthly\:Payment=\frac{0.002167*11890}{1-(1+0.002167)^{-48}} [/TeX]

=$261.08

The Monthly Payment on the car loan is $261.08.