Question

A college student is buying a used car for $10,000. The student can either pay in full with cash from savings, or finance the car for 60 months at a monthly compounding interest rate of 6.25%, which results in a monthly payment of $227.62. How much more is paid over the life of the loan versus paying in cash?

$13,657.20
$3,657.20
$1,138.10
$11,138.10

Answer 1

Answer: $3,657.20 (B)

Explanation:

Aight so basically you first need to apply the formula
Total Payment = monthly payment * the number of months

Monthly Payment = $227.62
Number of months=60

Total Payment (financed)=$227.62 * 60= $13,657.20

Total payment - initial cost = $13,657.20-$10,000 =$3,657.20

Hope this helped!

Answer 2

Answer is $3,657.20. If you take $227.62 times 60= $13657.20 then subtract that from the 10,000.00 you get 3,657.20 more you are paying.