When an auto loan's terms are an 8%-per-year interest rate,seven years in length,and a purchase price of $20,000,what value should be entered in the Rate field?
A) 8%
B) .08*12
C) .08/12
D) 8%-12

Question

Quizplus · Accepted Answer

The rate field requires the monthly interest rate, not the annual interest rate. To convert an annual interest rate to a monthly rate, you need to divide it by 12. Therefore, the correct answer is 0.08/12 or 0.0067.

When an Auto Loan's Terms Are an 8%-Per-Year Interest Rate,seven