Suppose that you are thinking about buying a car and have narrowed down your choices to two options.

The new-car option: The new car costs

$26,000

and can be financed with a

threethree-year

loan at

5.71%.

The used-car option: A three-year old model of the same car costs

$13,000

and can be financed with a

fivefive-year

loan at

5.01%.

What is the difference in monthly payments between financing the new car and financing the used car?

The difference in monthly payments between financing the new car and financing the used car is

nothing.