You go to a car dealer and pick out a vehicle that costs $31,210 "out-the-door." Instead of paying all the cash upfront, you can put down an amount and finance the rest of the car loan. The money will be financed over 5 years at 4.5%. By hand, compute the following:

If you put down 15% of the car’s cost, what is the amount of the car loan?

Find the total amount paid for the car (including the down payment)

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wifilethbridge wifilethbridge · Answer 1 · 2019-09-17T06:57:58+02:00

Answer:

Cost of car = $31,210

Now we are given that you put down 15% of the car’s cost.

So, Down payment = [tex]15\% \times 31210[/tex]

= [tex]\frac{15}{100} \times 31210[/tex]

= [tex]4681.5[/tex]

So, Amount of car loan = Total cost - Down payment

Amount of car loan =$31210 - $4681.5

=$26528.5

Thus Amount of car loan is $26528.5

Now To find the total amount of car

Principal = $26528.5

Rate of interest = 4.5%

Time = 5 years

[tex]A=P(1+r)^t[/tex]

[tex]A=26528.5(1+\frac{4.5}{100})^5[/tex]

[tex]A=33059.337533[/tex]

Total amount including down payment = $33059.337533+$4681.50 = $37740.837533

Hence the total amount paid for the car (including the down payment) is $37740.83