Mark Green is considering buying a new Honda Accord. The purchase price of the car is $21,000 but Mark has a trade-in worth $4,500. Mark needs a loan to buy the car and knows that his local bank requires him to put down 10 percent of the purchase price after the value of the trade-in is considered. Mark also knows that bank will charge 8 percent for the loan and require monthly payments over the next 4 years.
-What is the minimum down payment that Mark must make?

Question

Quizplus · Accepted Answer

Mark needs to put down 10% of the purchase price after subtracting the trade-in value. The trade-in value is $4,500, which means the purchase price after the trade-in is $21,000 - $4,500 = $16,500. 10% of $16,500 is $1,650, so that is the minimum down payment that Mark must make. Therefore, the correct answer is option C.

Mark Green Is Considering Buying a New Honda Accord