SOLUTION: Artie buys a new car for ​$15,000. He makes a down payment of ​$3,000 and the dealer gives him an​ add-on loan, charging him an annual interest rate of 7.7​
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Question 1099468: Artie buys a new car for $15,000. He makes a down payment of $3,000 and the dealer gives him an add-on loan, charging him an annual interest rate of 7.7%. If he takes out a 6-year loan, what will Artie's monthly payments be?
Answer by Theo(13342) (Show Source): You can put this solution on YOUR website!
an add-on loan calculates the interest rate on what's owed using a simple interest type formula and then adds that to the principal.
the new car costs 15,000.
you pay 3,000 down payment.
add-on loan is taken out for 12,000 at 7.7% per year for 6 years.
12,000 * .077 * 6 = 5544 interest.
this is added to 12,000 to get a new principal of 17,544.
your monthly payment would be 17,544 / (6 * 12) = 17,544 / 72 = 243.67 per month.
here's an add-on loan calculator that does the arithmetic for you.
you should, however, understand the formula.
loan = principal plus interest on principal for number of time periods.
your loan is 12000.
the interest is 7.7% for 6 years which equals 12000 * .077 * 6 = 5544.
your total loan required to be paid back is 12000 + 5544 = 17544.
the calculator can be found at http://www.csgnetwork.com/addonintcalc.html
you would give it the original loan amount (12000) and the annual interest rate percent (7.7) and the number of months of the loan (72).
it then tells you the total amount you have to repay, the interest, and the monthly payment.
do the calculations manually and then use the calculator and you will see that the results will be consistent with each other.
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