Sam purchased a 2020 PT Cruiser GT for $25,000. Sam paid a 5%down payment, and...

Sam purchased a 2020 PT Cruiser GT for $25,000. Sam paid a 5% down payment, and then obtained a 60-month installment loan with an APR of 8%. a. Determine the amount of the down payment. b. Determine Sam’s total finance charge.

a. Determine the amount of the down payment.

b. Determine Sam’s total finance charge.

Solutions

Expert Solution

- Price of PT Cruiser GT = $25,000

a). Down payment = 5%

Amount of Down payment = $25,000*5%

= $1250

- Loan amount = $25,000 - $1250

= $23,750

Calculating the Monthly Loan payment:-

Where, P = Loan amount = $23,750

r = Periodic Interest rate = 8%/12 = 0.66666%

n= no of periods = 60 months

Monthly payment = $481.56

Total Finance Charge = (No of monthly Payment*Monthly payment) - Loan amount

Total Finance Charge = (60*$481.56) - $23,750

Total Finance Charge = $5143.60

jeff jeffy answered 1 year ago

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