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Furniture to Go is offering new customers an opportunity to defer their furniture purchase payments for 3 months before their first payment is due. You
Furniture to Go is offering new customers an opportunity to defer their furniture purchase payments for 3 months before their first payment is due. You purchased furniture costing $8,000 and want to take advantage of the 3 months’ deferral before making your first payment. You agree to pay the loan in monthly payments over a 3-year period after the deferral period. If the interest rate is 12% per year and interest accrue monthly during the 3 months’ deferral period.
- Draw the cash flow diagram from your perspective.
- How much are your monthly payments?
- How much interest will you pay over the life of your loan? (you make all scheduled payments)
- You decide to pay off your car loan when you make your 24th payment. What will be the payoff for the loan?
- How much interest did you save by paying the loan off in 24 months versus keeping the loan for the original term?
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