You are buying a previously owned car today at a price of $4,950. You are paying $750 down in cash and financing the balance for 42 months at 8.45%. What is the amount of each loan payment?

Question

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To find the monthly loan payment, you can use the formula for calculating loan payments or a financial calculator. The loan amount is $4,950 - $750 = $4,200. The interest rate per month is 8.45% per year, or 8.45/12 = 0.7042% per month. The number of payments is 42 months. Using the formula for an installment loan payment or a financial calculator, you find the monthly payment to be approximately $115.86.

You Are Buying a Previously Owned Car Today at a Price