Personal Finance (MindTap Course List)
13th Edition
ISBN: 9781337099752
Author: E. Thomas Garman, Raymond Forgue
Publisher: Cengage Learning
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Question
Chapter 8, Problem 4DTM
Summary Introduction
Case summary: The Person KP is looking to purchase a new car where the person is in dilemma about financing decision. The person have two options either dealer finance can be done or loan from the bank can be taken. The person is looking for most appropriate and cost effective financing for new car.
Character in the case: Person KP
Adequate information:The price of the car model is $34,000. Dealer is offering rebate of $2500 at 2% APR along with down payment of $1000. Monthly payment will be $578 for 60 months. Bank is offering loan at 5% APR.
To determine: The most beneficial offer amongst dealer financing and bank loan.
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Rebate Versus Low Interest Rate
Kyle Parker of Concord, New Hampshire, has been shopping for a new car for several weeks. He has negotiated a price of $38,000 on a model that carries a choice of a $2,500 rebate or dealer financing at 2 percent APR. The dealer loan would require a $1,000 down payment and a monthly payment of $649 for 60 months. Kyle has also arranged for a loan from his bank with a 4 percent APR. Use the Run the Numbers worksheet to advise Kyle about whether he should use the dealer financing or take the rebate and use the financing from the bank. Round your answer to two decimal places.
Adjusted APR (dealer financing): %
Kyle should use ________.
Kelly Robins is considering purchasing a usedautomobile. The price including the title and taxes is$15,455. Kelly is able to make a $2,455 down payment. The balance of $13,000 will be borrowed fromher credit union at an interest rate of 9.45% compounded daily. The loan should be paid in 36 equalmonthly payments. Compute the monthly payment.What is the total amount of interest Kelly has to payover the life of the loan?
You want to buy a new sports coupe for $75,200, and the finance office at the dealership has quoted you a loan with an APR of 7.6 percent for 48 months to buy the car.
What will your monthly payments be?
Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
What is the effective annual rate on this loan?
Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
Chapter 8 Solutions
Personal Finance (MindTap Course List)
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Similar questions
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