SOLUTION: You need to borrow $20,000 to buy a car. You can only afford to make monthly payments of $200. The bank offers 3 choices: 3-year loan at 5%; 4- year loan at 6%, and a 5-year loan a

Question 1037418: You need to borrow $20,000 to buy a car. You can only afford to make monthly payments of $200. The bank offers 3 choices: 3-year loan at 5%; 4- year loan at 6%, and a 5-year loan at 7%.
a) What's the monthly payment for each loan?
b) Which loan is best for your situation?
c) What's the total amount you would pay over the term of each loan?
Answer by jorel555(1290) (Show Source): You can put this solution on YOUR website!
a)20000/36=555.55x1.05=$583.33 monthly payment
20000/48=416.67x1.06=$441.67 monthly payment
20000/60=333.33x1.07=$356.67 monthly payment
b) No loan is best for your situation, as you can only afford $200 for car payments!!!!
c)583.33x36=$21000
416.67x48=$21200
356.67x60=$21400!!!!!!!!!!!!!
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