Question

tim wants to buy a used convertible, which costs $30,000. he will pay a down payment of 10 percent and finance the rest at 12 percent. if he finances the vehicle over 5 years, how much will his total finance charge be?

Answer 1

Tim will pay a total finance charge of $16,200 over 5 years after financing $27,000 at a rate of 12%.

Step-by-step explanation:

To calculate the total finance charge, we first determine the amount to be financed by subtracting the down payment from the total cost of the car. Tim's down payment is 10% of $30,000, which equals $3,000. Therefore, Tim will finance $30,000 - $3,000 = $27,000. Using the simple interest formula I = PRT (where I is the interest, P is the principal, R is the rate, and T is time in years), we calculate the total finance charge:
Interest (I) = Principal (P) x Rate (R) x Time (T)

I = $27,000 x 12% x 5 years

I = $27,000 x 0.12 x 5

I = $16,200

Therefore, Tim's total finance charge over the 5 years will be $16,200.