How much will your monthly payment be?

Question

You borrow money to purchase a car. You secure a 5 year loan for $15,000 with an annual percentage rate of 5%. How much will your monthly payments be?

Answer 1

To solve this problem we can use the standard loan amortization formula

Monthly Payment = P [ r(1+r)n / (1+r)ⁿ -1]

where

P = the principal loan amount

r = Monthly interest rate (0.05 ÷ 12)

n = Total number of months (5 × 12 = 60)

Monthly Payment = $283.07