Buying a Car

You are purchasing a new car for $27,600. The dealership offers you three options:

0% financing: 0 down and 0% financing for 48 months.

Rebate: 0 down. If you choose the rebate, you will need to secure a loan for the balance at your local bank.

Down payment: Make a down payment of 5% or more and get financing at 1.5% compounded monthly for 48 months:

Use this information for the questions below.

1. Use the Buying a Car information above to answer this question.

Suppose you make a down payment of 10% of $27,600 and finance the rest at 1.5% compounded monthly for 48 months. How much interest do you pay over the life of the loan?

$ . Round to the nearest dollar.

2. Use the Buying a Car information above to answer this question.

What is your monthly payment if you choose 0% financing for 48 months?

$ . Round to the nearest dollar.

3. Use the Buying a Car information above to answer this question.

The rebate offer is $4900, and you can obtain a car loan at your local bank for the balance at 4.03% compounded monthly for 48 months. If you choose the rebate, what is your monthly payment?

$ . Round to the nearest dollar.

4. Use the Buying a Car information above to answer this question.

You want to make monthly payments of $489, but you don't want a car loan over your head for more than 48 months, so you decide to go with the down payment option. How much of a down payment do you need to make?

$ . Round to the nearest dollar.