Question

1. Elissa is buying a new car. She has an excellent credit score of
822. She is able to get a low interest rate of 2.25% and will
have a down payment of $4,000 on a car that costs $19,500.
Calculate her monthly payments for a 5-year loan.

Answer 1

Answer:

$273.38 per month

Step-by-step explanation:

Monthly Payment Formula

$\sf PMT=\dfrac{Pi(1+i)^n}{(1+i)^n-1}$

where:

• PMT = monthly payment
• P = loan amount
• i = interest rate per month (in decimal form)
• n = term of the loan (in months)

Given:

• P = $19,500 - $4,000 = $15,500
• i = 2.25% / 12 = 0.0225 / 12
• n = 5 years = 60 months

$\implies \sf PMT=\dfrac{15500 (\frac{0.0225}{12})(1+\frac{0.0225}{12})^{60}}{(1+\frac{0.0225}{12})^{60}-1}$

$\implies \sf PMT=273.3788438$

$\implies \sf PMT=\ 273.38$