Challenge: Suppose you purchase a new car today for $21,000. Instead of paying all of $21,000 today, you decide to finance the balance over 36 months with the down payment of $1,000. That is, paying $20,000 can be spread out over 36 months. If the interest rate is 6% (in this case, interest rate is the cost of financing), what would have to be your monthly payment? Tips: The units have to be consistent. In this case, everything has to be in terms of month. Divide the annual interest rate 6% by 12 to get the monthly interest rate. n is the number of months, not years.