25. Emile bought a car for $24,000 three years ago.

Question

25.
Emile bought a car for $24,000 three years ago. The loan had a 5 year term at 3%
interest rate. How much does he still owe on the car?

Answer 1

I believe that, in many states, car loans are handled as follows(very advantageously to the seller, I might add):

 

3 years of interest are computed and added to the sales price. (We are going to ignore sales tax et al, because we'll assume that the $24K includes all charges except interest). This total interest is added to the out-the-door fixed price; I

believe this interest would be 0.09(24,000) = $2160.

 

Now the total $26,160 is divided by 60 months = $436 is the monthly payment.

 

He still owes $26,160 - 36(436) = $10,464.