Franki finances a motor home for $44,700 by taking out an installment loan for 36 months. The payments were $1,774.31 per month and the total finance charge was $19,175.16. After 25 months, Franki decided to pay off the loan. After calculating the finance charge rebate, find the loan payoff amount.

Franki finances a motor home for $44,700 by taking out an installment loan for 36 months. The payments were $1,774.31 per month and the total finance charge was $19,175.16. After 25 months, Franki decided to pay off the loan. After calculating the finance charge rebate, find the loan payoff amount.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 19P

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Concept explainers

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.

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