Question

You (or your parents) are debating about whether to buy a new car for $19,072. 00 or a used car for $15,635. 0. Sales tax is 4. 5%. You (or your parents) plan to make a down payment of $1,200. 00 and your credit rating is fair. What is the difference in interest accrued by the end of the first month?.

Answer 1

The difference in interest accrued by the end of the first month of the car purchase is $46.07, showing that more interest is paid for the used car than the new car.

Different interest rates for used and new cars

Generally, interest rates on a new car loan are less than the interest rates on a used car loan. Sometimes, new cars qualify for 0% financing. The implication is that the older the car is, the higher the interest rate because of the high uncertainty with its value.

Data and Calculations:

                                             New Car          Used Car

Costs                                    $19,072             $15,635

Sales tax                                  4.5%                  4.5%

Sales tax in dollars                  $858.24          $703.58

Down payment                     ($1,200)           ($1,200)

Car Loan                              $18,730.24      $15,138.58

Interest rates                           9.9%                 15.9%

Interest in dollars per month  $154.52       $200.59 ($15,138.58 x 15.9%/12)

Difference in interest = $46.07 ($200.59 - $154.52)

Thus, the difference in interest accrued by the end of the first month of the car purchase is $46.07, showing that more interest is paid for the used car than the new car.

Learn more about the interest rates for new and used cars at https://brainly.com/question/1918419