question archive You are thinking about buying a car and need to borrow $19,300

You are thinking about buying a car and need to borrow $19,300

Subject:FinancePrice:2.86 Bought22

You are thinking about buying a car and need to borrow $19,300. Your bank will make you a 4-year loan at 7.9% interest. What will be your monthly payment?

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First of all we need need to calculate the monthly interest rate = 7.9 / 12 = 0.65833%

Total number of payments = 4 years * 12 months = 48

now we need present value annuity factor for 0.65833%, 48 months = 41.0408

Monthly payment = loan amount / present value annuity factor 0.65833%, 48 months

Monthly payment = 19300 / 41.0408 = 470.2636

Proof - Amortization table

Month Opening Balance Interest Instalment Closing balance
1 19,300 127 470 18,957
2 18,957 125 470 18,611
3 18,611 123 470 18,264
4 18,264 120 470 17,914
5 17,914 118 470 17,561
6 17,561 116 470 17,207
7 17,207 113 470 16,850
8 16,850 111 470 16,490
9 16,490 109 470 16,129
10 16,129 106 470 15,764
11 15,764 104 470 15,398
12 15,398 101 470 15,029
13 15,029 99 470 14,658
14 14,658 96 470 14,284
15 14,284 94 470 13,908
16 13,908 92 470 13,529
17 13,529 89 470 13,148
18 13,148 87 470 12,764
19 12,764 84 470 12,378
20 12,378 81 470 11,989
21 11,989 79 470 11,598
22 11,598 76 470 11,204
23 11,204 74 470 10,807
24 10,807 71 470 10,408
25 10,408 69 470 10,007
26 10,007 66 470 9,602
27 9,602 63 470 9,195
28 9,195 61 470 8,785
29 8,785 58 470 8,373
30 8,373 55 470 7,958
31 7,958 52 470 7,540
32 7,540 50 470 7,119
33 7,119 47 470 6,696
34 6,696 44 470 6,270
35 6,270 41 470 5,841
36 5,841 38 470 5,409
37 5,409 36 470 4,974
38 4,974 33 470 4,537
39 4,537 30 470 4,096
40 4,096 27 470 3,653
41 3,653 24 470 3,207
42 3,207 21 470 2,758
43 2,758 18 470 2,306
44 2,306 15 470 1,850
45 1,850 12 470 1,392
46 1,392 9 470 931
47 931 6 470 467
48 467 3 470 0

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