Question 1083909: A car costs $25,000 plus $675 for tax, title, and license fees. Ari finances the car by putting down $2,500 in cash and taking out a 3-year, 4% loan. What will his monthly payments be (if figured across all 3 years rather than annually)?
Answer by Theo(13342)   (Show Source):
You can put this solution on YOUR website! the car costs 25,000
tax, title and license fees are 675.
the total cost for the car is therefore 25,675.
he puts 2,500 down and finances the rest.
presumably this includes the tax, title and license fees as well.
therefore, he finances 25,675 minus 2,500 = 23,175.
the interest rate on the loan is compounded monthly.
this means the interest rate per month is 4/12 percent = .3333.... percent per month.
you can use an online time value of money calculator to find the monthly payment.
one such calculator can be found here:
https://arachnoid.com/finance/
your inputs would look like this:
your outputs would look like this:
you input the following:
present value = 23175
future value = 0
your time periods are in months
number of time periods = 3 years * 12 months = 36
payment amount = 0 or blank
interest rate percent per time period = 4 percent per year / 12 months in a year = .33333333
payment is made at the end of each time period.
when you click on pmt, you will get a monthly payment of 684.22
the present value is positive because that's the amount of money you will receive from the loan so you can use that to pay the car seller.
the monthly amount is negative because that's what you are paying out each month in order to pay off the loan.
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