A college student purchased a used car for $4000. He paid 15% down and then paid 18 monthly payments of $206.55. Determine the APR of the loan to the nearest one-half of a percent.

Question

Quizplus · Accepted Answer

The student paid $600 down (15% of $4000), leaving $3400 to be financed. The total of the monthly payments is $3717.90 (18 x $206.55). The finance charge is $317.90 ($3717.90 - $3400). Using the formula for APR, the APR is approximately 11.5%.

A College Student Purchased a Used Car for $4000