7. Total Cost for Savings

Dean is planning to purchase a new Nissan Altima which costs $26,865. He has saved up $3,200 to put toward it. He is thinking about getting a loan for it from his credit union, but he could also keep driving his beat-up old car for a while longer and save up cash for the new one.

Dean would like to get the car soon, but he wants to at least look into the option of saving up and paying cash for the car so he doesn't have to pay so much for interest.

Possibility Two: Saving Up

Assume Dean puts his $3,200 in his savings account, which has an APR of 1.2%. You've already determined how much he needs to add to the account every month in order to have all $26,865 saved up to pay cash for the car in five years. If Dean decides to do this, how much of his own money will he have put into the savings account to pay for his car? Don't forget the initial deposit as well as the monthly payments.

8. Cost Comparison

Dean is planning to purchase a new Nissan Altima which costs $26,865. He has saved up $3,200 to put toward it. He is thinking about getting a loan for it from his credit union, but he could also keep driving his beat-up old car for a while longer and save up cash for the new one.

Possibility Two: Saving Up

You've already calculated the total Dean would spend on the car if he gets the loan, and also the total he would spend on the car if he saves up for it. Use those two numbers to determine how much less he would pay for the car by saving up for it instead of getting the loan.

9. Saving Faster

Dean is planning to purchase a new Nissan Altima which costs $26,865. He has saved up $3,200 to put toward it. He is thinking about getting a loan for it from his credit union, but he could also keep driving his beat-up old car for a while longer and save up cash for the new one.

Possibility Two: Saving Up

Assume Dean puts his $3,200 in his savings account, which has an APR of 1.2%. Dean knows he could afford the monthly loan payment that we calculated earlier. If he deposits that amount into his savings account every month how many years will it take him to save up for the car? Round your answer to two decimal places.