In: Finance
You are purchasing a 2015 Chrysler 200 for $19,400, with 20% down. The balance will be financed at 7.6% over seven years with monthly payments. Find:
Monthly payment
Total interest charges
Interest in month three
How much interest is saved if you increase monthly payments by $50?
Five years later you sell for $5,000, and you must pay off the remaining loan balance when sold. What is your net cash position after selling?
Note: average auto depreciation is almost 50% in three years; Chrysler has poorest resale of all domestic manufacturers.
A few hints:
Be exact with your PMT. Don't round. Over many time periods, it results in significant imprecision.
For monthly interest, #1 -- find PMT, #2 -- find interest by multiplying principal x rate x time (1/12 of a year). #3 -- subtract interest from payment. #4 -- difference is principal reduction for the 1st month. #5 -- subtract #4 from original principal balance, then repeat step 2.
Use a finance calculator or Excel. No tables. Avoid modeling...imprecision and errors are common.