You have found the car that you've been looking for. You finally come to a purchase price with the dealership. Now comes the financing. After lengthy discussions, there are several options you can choose. The drive-out price (car, taxes, title, registration) is $45,000. Financing Options: 1. You do not have a trade-in for your car. The dealership is offering financing for 6%, per year, for a period of 6 years, assuming a down payment of $1,500. 2. From the dealership, you can get a lower interest rate (4\%) but the term of the loan is 5 years; no down payment required; no trade-in. 3. Your local bank has a "New Graduate" deal which includes an interest rate of 2% with a no down payment, no trade-in. Payments are only $600/ month. First payment isn't until 6 months, from now. In Excel, create an amortization schedule for each of the scenarios so that you can compare your results. Your amortization schedule should show the monthly payments, interest and running loan balance until the maturity of the loan. Additionally, show totals of payments and interests over the term of the loan as well as calculate an effective interest rate. Pick an option, from above, that works best for your personal situation. Write a narrative telling me WHY you would pick the option you chose. Now...... 4. After 6 months, you sold your old vehicle and received $1,200, cash and have decided to pay it towards the financing YOU CHOSE. Additionally, you found out that the company usually awards a Christmas bonus each year of $500. You believe that you can apply that $500, every year, to your car note, at the end of December of each year (12th month). Based on the option that you selected above, update your amortization schedule and provide a narrative on how the amortization changes. 5. What if you are able to pay an extra $25 per month against the loan? Describes how your loan changes. You have found the car that you've been looking for. You finally come to a purchase price with the dealership. Now comes the financing. After lengthy discussions, there are several options you can choose. The drive-out price (car, taxes, title, registration) is $45,000. Financing Options: 1. You do not have a trade-in for your car. The dealership is offering financing for 6%, per year, for a period of 6 years, assuming a down payment of $1,500. 2. From the dealership, you can get a lower interest rate (4\%) but the term of the loan is 5 years; no down payment required; no trade-in. 3. Your local bank has a "New Graduate" deal which includes an interest rate of 2% with a no down payment, no trade-in. Payments are only $600/ month. First payment isn't until 6 months, from now. In Excel, create an amortization schedule for each of the scenarios so that you can compare your results. Your amortization schedule should show the monthly payments, interest and running loan balance until the maturity of the loan. Additionally, show totals of payments and interests over the term of the loan as well as calculate an effective interest rate. Pick an option, from above, that works best for your personal situation. Write a narrative telling me WHY you would pick the option you chose. Now...... 4. After 6 months, you sold your old vehicle and received $1,200, cash and have decided to pay it towards the financing YOU CHOSE. Additionally, you found out that the company usually awards a Christmas bonus each year of $500. You believe that you can apply that $500, every year, to your car note, at the end of December of each year (12th month). Based on the option that you selected above, update your amortization schedule and provide a narrative on how the amortization changes. 5. What if you are able to pay an extra $25 per month against the loan? Describes how your loan changes
