How much will you have paid in interest over the course of the loan?

Question

A new furniture set costs $ 2800. If you make a down payment of $ 300 and finance the rest at a rate of 5.8% for 18 months, find the monthly payments on your loan. How much will you have paid in interest over the course of the loan?

Repayment amount = 

Interest paid

Answer 1

First we determine the principal payment which is the cost minus the down payment

2800-300= $2500

Then we find out what the monthly payments will be by taking the principal and dividing it by the time (18 months)

$2500/18 = $ 138.89/month

We then multiply it by the interest rate of 5.8%

138.89* (1 + 0.058) = $146.95 payment per month

The total including interest is $2645.08

The total amount that is paid towards interest can then be found by subtracting 2645.08 - 2500 = $145.08.

$145.08 in total interest

Hope this helps!