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 size of Mark's monthly payments if he makes the minimum down payment on the car?

Question

Quizplus · Accepted Answer

The down payment that Mark needs to make is 10% of the purchase price after the trade-in value is considered.
Purchase price after trade-in = $21,000 - $4,500 = $16,500
Down payment = 10% of $16,500 = $1,650

So, Mark needs to take a loan of $16,500 - $1,650 = $14,850
Using an online loan calculator or a financial calculator, we can find that the monthly payment on this loan is $362.53. Therefore, the answer is A.

Mark Green Is Considering Buying a New Honda Accord