Problem 7-9 Calculating the Total Cost of a Purchase, the Monthly Payment, and an APR [LO7-2] After visiting several automobile dealerships, Richard selects the used car he wants. He likes its $13,300 price, but financing through the dealer is no bargain. He has $2,000 cash for a down payment, so he needs an $11,300 loan. In shopping at several banks for an installment loan, he learns that interest on most automobile loans is quoted at add-on rates. That is, during the life of the loan, interest is paid on the full amount borrowed even though a portion of the principal has been paid back. Richard borrows $11,300 for a period of four years at an add-on interest rate of 8 percent.