Financing a Car - Chris Cooper's Math Site

Financing a Car

Installment Loan ? a loan that you pay off with weekly or monthly payments (or other time period)

Pro: Consumer can use product immediately

Con: Interest can add a large amount to the cost of the product

Loan Payment

Loan Payment

Ex. Suppose you decide to borrow $15,000 for a new car. You can select one of the following loans, each requiring regular monthly payments. Installment Loan A: four-year loan at 8% Installment Loan B: six-year loan at 10%

a) Find the monthly payments and the total interest for Loan A b) Find the monthly payments and the total interest for Loan B c) Compare the monthly payments and total interest for the two loans.

Loan Payment

Ex. Suppose you decide to borrow $15,000 for a new car. You can select one of the following loans, each requiring regular monthly payments. Installment Loan A: four-year loan at 8% Installment Loan B: six-year loan at 10%

a) Find the monthly payments and the total interest for Loan A

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