A recent college graduate buys a new car by borrowing $16,000 at 8.4%, compounded monthly, for 4 years. She decides to pay $419 instead of the monthly payment required by the loan.

Question

How much will she save by paying $419 per month rather than the required payment? (Round your answer to the nearest cent.)

Answer 1

You have several similar questions to this. Check the answers on those and see if you can follow them and apply similar methods here. If you get stuck, show how much work you are able to do, and then we can give guidance. You might also consider a session with a tutor.

Answer 2

Oh, dear.

Let's hope your finance company does better than a house loan mortgage company (Washington Mutual) I dealt with once. Paid more than the required payments -- they stuck it all into a separate account, deemed the payments late, and charged late fees for each monthly payment. Phoned them, they then entered correcting entries for each changed line item. But then an auditor later didn't understand, and re-charged the original penalties for each affected payment. This happened THREE times, the account statement ran on for many pages. They just couldn't deal with overpayments! Finally pulled the loan from them -- and they went bankrupt shortly thereafter. Can you imagine the hassle it would have been trying to explain that to the receiver company on the bankrupcy?

You can set this up fine as a spreadsheet, with interest charges monthly, payments credited to interest and principal variously monthly, and principal carried forward. Why haven't you done that-- Cheers, --Mr. d.