Comparing APRs James Sprater of Grand Junction, Colorado, has been shopping for a loan to buy a used car He wants to borrow $18,000 for four or five years James' credit union offers a declining balance loan at 9 1 percent for 48 months, resulting in a monthly payment of $448 79 The credit union does not offer five year auto loans for amounts less than $20,000, however If James borrowed $18,000, this payment would strain his budget A local bank offered current depositors a five year loan at a 9 34 percent APR, with a monthly payment of $376 62 This credit would not be a declining balance loan Because James is not a depositor in the bank, he would also be charged a $25 credit check fee and a $50 application fee James likes the lower payment but knows that the APR is the true cost of credit, so he decided to confirm the APRs for both loans before making his decision Round your answers to two decimal places What is the APR for the credit union loan Use the n ratio formula to calculate and confirm the APR on the bank loan as quoted for depositors What is the add on interest rate for the bank loan What would be the true APR on the bank loan if James did not open an account to avoid the credit check and application fees Do the Math 7 5 Comparing APRS James Sprater of Grand Junction, Colorado, has been shopping for a loan to buy a used car He wants to borrow $18,000 for four or five years James' credit union offers a declining balance loan at 9 1 percent for 48 months, resulting in a monthly payment of $448 79 The credit union does not offer five year auto loans for amounts less than $20,000, however If James borrowed $18,000, this payment would strain his budget A local bank offered current depositors a five year loan at a 9 34 percent APR, with a monthly payment of $376 62 This credit would not be a declining balance loan Because James is not a depositor in the bank, he would also be charged a $25 credit check fee and a $50 application fee James likes the lower payment but knows that the APR is the true cost of credit, so he decided to confirm the APRs for both loans before making his decision Round your answers to two decimal places a What is the APR for the credit union loan b Use the n ratio formula to calculate and confirm the APR on the bank loan as quoted for depositors c What is the add on interest rate for the bank loan d What would be the true APR on the bank loan if James did not open an account to avoid the credit check and application fees

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Comparing APRs James Sprater of Grand Junction, Colorado, has been shopping for a loan to buy a used car. He wants to borrow $18,000 for

Comparing APRs

James Sprater of Grand Junction, Colorado, has been shopping for a loan to buy a used car. He wants to borrow $18,000 for four or five years. James' credit union offers a declining-balance loan at 9.1 percent for 48 months, resulting in a monthly payment of $448.79. The credit union does not offer five-year auto loans for amounts less than $20,000, however. If James borrowed $18,000, this payment would strain his budget. A local bank offered current depositors a five-year loan at a 9.34 percent APR, with a monthly payment of $376.62. This credit would not be a declining-balance loan. Because James is not a depositor in the bank, he would also be charged a $25 credit check fee and a $50 application fee. James likes the lower payment but knows that the APR is the true cost of credit, so he decided to confirm the APRs for both loans before making his decision. Round your answers to two decimal places.

What is the APR for the credit union loan?

%
Use the n-ratio formula to calculate and confirm the APR on the bank loan as quoted for depositors.

%
What is the add-on interest rate for the bank loan?

%
What would be the true APR on the bank loan if James did not open an account to avoid the credit check and application fees?

%

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Do the Math 7-5 Comparing APRS James Sprater of Grand Junction, Colorado, has been shopping for a loan to buy a used car. He wants to borrow $18,000 for four or five years. James' credit union offers a declining- balance loan at 9.1 percent for 48 months, resulting in a monthly payment of $448.79. The credit union does not offer five-year auto loans for amounts less than $20,000, however. If James borrowed $18,000, this payment would strain his budget. A local bank offered current depositors a five-year loan at a 9.34 percent APR, with a monthly payment of $376.62. This credit would not be a declining-balance loan. Because James is not a depositor in the bank, he would also be charged a $25 credit check fee and a $50 application fee. James likes the lower payment but knows that the APR is the true cost of credit, so he decided to confirm the APRs for both loans before making his decision. Round your answers to two decimal places. a. What is the APR for the credit union loan? % b. Use the n-ratio formula to calculate and confirm the APR on the bank loan as quoted for depositors. c. What is the add-on interest rate for the bank loan? % d. What would be the true APR on the bank loan if James did not open an account to avoid the credit check and application fees? %