1. What would be the principal of the loan if you chose Option 1? (Hint: don’t forget the down payment.) 2. Find the monthly payment if you chose Option 1. 3. Find the total interest paid over the life of the loan if you chose Option 1.
They will make a $2500 down payment and they will help you with the monthly payments until you graduate. They have requested that you find out how much a Honda Civic will cost, including any special incentives. You have found a new 2022 Honda Civic for $23,350 at a local dealership. The dealership is offering
two options:
Option 1: This option includes 1.99% financing for 60 months (we will assume this is a conventional loan).
Option 2: This option includes a $1500 rebate1. Note that in this case, you are not eligible for the loan mentioned
in Option 1 and would have to find financing through a local bank or credit union.
1. What would be the principal of the loan if you chose Option 1? (Hint: don’t forget the down payment.)
2. Find the monthly payment if you chose Option 1.
3. Find the total interest paid over the life of the loan if you chose Option 1.
4. Create an amortization table showing all information relating to the first three monthly payments for
Option 1.
5. What would be the principal of the loan if you chose Option 2? (Hint: this option includes both the rebate
and the down payment.)
6. Find the monthly payment if you chose Option 2 and obtained a 5-year conventional loan from the credit
union with an interest rate of 3.98%.
7. Find the total interest paid over the life of the loan if you chose Option 2 + the credit union loan
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