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You are in the process of purchasing a new automobile that will cost you $27,500.The dealership is offering you either a $2500 rebate (applied toward the purchase price)or 1.9% financing for 48 months (with payments made at the end of the month).You have been pre-approved for an auto loan through your local credit union at an interest rate of 6.5% for 48 months.
-If you forgo the $2500 rebate and finance your new car through the dealership your monthly payments (with payments made at the end of the month)will be closest to:
A)$520.
B)$573.
C)$595.
D)$799.

Question

Quizplus · Accepted Answer

The correct answer is C.The monthly payment for the dealership financing is $595.25. The monthly payment for the credit union financing is $572.96. The difference between the two monthly payments is $22.29. The $2500 rebate is equivalent to $52.08 per month over the 48-month loan term. Therefore, the monthly payment for the dealership financing is $52.08 less than the monthly payment for the credit union financing. This means that the monthly payment for the dealership financing is $572.96 + $52.08 = $595.25.

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