Solve the problem using the loan payoff table or an amortization table.
-John Thomas bought a new car for $16,445. He paid 10% down and monthly payments for 3 years at 10%. Find the amount of each monthly payment necessary to amortize the loan and the total amount of interest paid over the 3 years.

Question

Solve the problem using the loan payoff table or an amortization table. 
-John Thomas bought a new car for $16,445. He paid 10% down and monthly payments for 3 years at 10%. Find the amount of each monthly payment necessary to amortize the loan and the total amount of interest paid over the 3 years.

Quizplus · Accepted Answer

Using the loan payoff table, we can determine that the amount financed is $14,800.50 ($16,445 - 10% down payment).
Using an amortization table or calculator, we can find the monthly payment necessary to fully amortize the loan over 36 months at a 10% interest rate is $477.61.
The total amount of interest paid over the 3 years is $2,393.46.
Therefore, the answer is B, $477.61 and $2,393.46. The amount of the loan is $16,445 - 10% down payment = $14,800.

Using an amortization table, we find that the monthly payment necessary to amortize the loan over 3 years at 10% is $477.61.

The total amount of interest paid over the 3 years is found by subtracting the original loan amount ($14,800) from the total of all monthly payments (36 payments × $477.61 = $17,154.96). Therefore, the total amount of interest paid is $17,154.96 - $14,800 = $2,354.96.

So, the answer is B) $477.61, $2,393.46.

Solve the Problem Using the Loan Payoff Table or an Amortization