I bought a car for $25000. A 2008 ChryslerAspen The interest rate is 5.24% The t

Question

I bought a car for $25000. A 2008 ChryslerAspen The interest rate is 5.24% The term of the loan is 72 months What is my monthly payment? What is the total amount I will be paying after 6 yrs? What is the interest I will be paying to finace thisvehicle? I bought a car for $25000. A 2008 ChryslerAspen The interest rate is 5.24% The term of the loan is 72 months What is my monthly payment? What is the total amount I will be paying after 6 yrs? What is the interest I will be paying to finace thisvehicle?

Explanation / Answer

Loan Amount = $25,000

Interest rate     = 5.24%

The Interest rate is = 5.24% / 12 = 0.436% (or)0.00436

The first thing we need is the annuity factor for 72 periods at0.436% interest rate per period.

$25,000 = Monthly Payment * Annuity Present Value factor

Annuity Present Value Factor = (1-Present Value Factor) / r

                                               = [1- (1/1.0043672)] / 0.00436

                                               = [1-(1/1.3678465)] / 0.00436

                                               = [1-0.731076] / 0.00436

                                               = [0.268924 / 0.00436]

                                               = 61.6798

$25,000 = Monthly Payment * 61.6798

Present Value of the Loan amount = $25,000

Interest Rate = 5.24%

Number of years = 6 years

Future Value (FV) = Present Value (PV) [1+r]t

                             = $25,000 [1+ (5.24% / 12)]6*12

                             = $25,000(1.00436)72

                             = $25,000 * 1.3678465

Principal Amount = $25,000

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