You have decided to purchase a new car!! You and the salesman have agreed on a price of $40,000. They have agreed to give you $5,000 for your current car as a trade-in. You have saved an additional $3,000 to add as a down payment. You plan to finance the car for 6 years. You are able to get an auto loan at 1.99% APR.

Questions

1) How much will you pay each month? Keep in mind that your trade-in and your down payment reduce your loan amount.

2) How much total will you end up paying for the car? (Remember that the down payment and the trade-in were both YOUR money.)

3) Create an amortization table for all 6 years of your loan. 

Imagine that you decide to pay $40 more than the required monthly payment. Does this affect the outcome?

Answer the questions below to find out, and use an amortization table to support your answer.

1) How much will your monthly payment be?

2) Will you pay off your loan sooner? If so, how much sooner?

3) How much total will you end up paying?

4) Will you save anything by adding $40/month to your payment until it is paid off? If so, how much?

5) Do you think it is a good idea to pay more than the minimum on loans and credit cards? Explain