Scenario 4 (Questions 9-11):Let's turn to thinking about a car loan.A car loan is repaid (amortized) over a shorter period of time.Now, you are choosing between buying a new or used car.The used car has relatively low mileage and is in good condition.Both vehicles come with good warranties.You can borrow either $15,000 (new) or $5,000 (used) over 3 years at 6.5% interest.

How much more is the monthly payment for the $15,000 loan than the $5,000 loan?That is, calculate the payment for borrowing $15,000 at 6.5% interest for 3 years then substract the payment for borrowing $5,000.