Financing a Car Answers

Bernie has decided to purchase a new car with a list price of $18,575. Sales tax in Bernie’s state is 7.40%, and he will be responsible for a $795 vehicle registration fee and a $110 documentation fee. Bernie plans to trade in his existing car, a 1999 Buick Riviera in good condition, and finance the rest of the cost for five years at an interest rate of 12.77%, compounded monthly. Assuming that the dealer gives Bernie the listed trade-in price for his car, what will his monthly payment be? Round all dollar values to the nearest cent.Buick Cars in Good ConditionModel/Year19981999200020012002Century$929$1,086$1,150$1,488$1,595LeSabre$2,075$2,282$2,690$2,935$3,374Regal$1,676$1,794$2,030$2,214$2,566Riviera$1,291$1,455$1,520$1,814$1,959

The following table shows a portion of a three-year amortization schedule. Use the information in the table to decide which of the following statements is true.

The following table shows a portion of a four-year amortization schedule. After three years, how much of the principal has been paid off?

When purchasing her new car, Molly traded in her previous car, which was a Buick in good condition. The dealer offered her 80% of the listed trade-in value for her car, giving her a total of $1,340.80. What was Molly’s previous car?Buick Cars in Good ConditionModel/Year19981999200020012002Century$929$1,086$1,150$1,488$1,595LeSabre$2,075$2,282$2,690$2,935$3,374Regal$1,676$1,794$2,030$2,214$2,566Riviera$1,291$1,455$1,520$1,814$1,959

Suzanne has purchased a car with a list price of $23,860. She traded in her previous car, which was a Dodge in good condition, and financed the rest of the cost for five years at a rate of 11.62%, compounded monthly. The dealer gave her 85% of the listed trade-in price for her car. She was also responsible for 8.11% sales tax, a $1,695 vehicle registration fee, and a $228 documentation fee. If Suzanne makes a monthly payment of $455.96, which of the following was her original car?Dodge Cars in Good ConditionModel/Year20042005200620072008Viper$7,068$7,225$7,626$7,901$8,116Neon$6,591$6,777$6,822$7,191$7,440Intrepid$8,285$8,579$8,699$9,030$9,121Dakota$7,578$7,763$7,945$8,313$8,581

The following table shows the first two years of a three-year amortization schedule. Use the information in the table to decide which of the following statements is true.

The following table shows a portion of a five-year amortization schedule. What percent of the payments made were due to interest for the months shown?

A trade-in is most closely related to which of the following?

Reg has just purchased a new car. The car had a list price of $22,499, and he was responsible for 7.96% sales tax, a $2,138 vehicle registration fee, and a $262 documentation fee. Reg’s financing has an interest rate of 10.27%, compounded monthly, and a duration of three years. If Reg makes a monthly payment of $773.89, which of the following was his down payment? Round all dollar values to the nearest cent. (Note: The sales tax is applied to the full list price of the car as there is no trade-in or discount)

Tyler is planning to buy a new car. He intends to trade in his existing car, a 2002 Chrysler Sebring in good condition. Using the table below, estimate how much Tyler’s car is worth.Chrysler Cars in Good ConditionModel/Year20002001200220032004Pacifica$2,194$2,288$2,605$2,690$2,814Concorde$1,842$1,998$2,180$2,781$2,925Sebring$2,920$3,075$3,260$3,551$3,912300M$2,770$2,934$3,095$3,188$3,676

Christopher has just made the final monthly payment necessary to pay off his car financing. The car had a list price of $25,995. He made a down payment of $2,434. Additionally, there was a $1,626 vehicle registration fee and a $275 documentation fee. He also paid sales tax of 8.44% on the cost of the vehicle. He included the taxes and fees with the purchase price of the car in a four-year finance agreement with an interest rate of 11.10%, compounded monthly. After completing payment of the four-year loan, what was the total amount of money that Christopher paid for his car? Round to the nearest dollar.

Why is the APR considered the most important factor to be mindful of in a car loan?

Cassandra purchased a new car. The car had a list price of $16,870. Cassandra made a down payment of $1,800 and financed the rest, paying 12.3% interest compounded monthly over a payment period of four years. If Cassandra also had to pay 7.8% sales tax, a $895 vehicle registration fee, and a $68 documentation fee, what is her monthly payment?

Charles is going to purchase a new car that has a list price of $21,450. He is planning on trading in his good-condition 2004 Dodge Neon and financing the rest of the cost over three years, paying monthly. His finance plan has an interest rate of 12.28%, compounded monthly. Charles will also be responsible for 6.88% sales tax, a $1,089 vehicle registration fee, and a $124 documentation fee. If the dealer gives Charles 80% of the listed trade-in price on his car, once the financing is paid off, what percent of the total amount paid will the interest be? (Consider the trade-in to be a reduction in the amount paid.) Dodge Cars in Good ConditionModel/Year20042005200620072008Viper$7,068$7,225$7,626$7,901$8,116Neon$6,591$6,777$6,822$7,191$7,440Intrepid$8,285$8,579$8,699$9,030$9,121Dakota$7,578$7,763$7,945$8,313$8,581

Laura is currently paying off her four-year car financing. When she purchased her car, it had a list price of $19,858. Laura traded in her previous car, a good-condition 2000 Honda Insight, for 85% of the trade-in value listed below, financing the rest of the cost at 9.5% interest, compounded monthly. She also had to pay 9.27% sales tax, a $988 vehicle registration fee, and a $77 documentation fee. However, because Laura wants to pay off her loan more quickly, she makes a total payment of $550 every month. How much extra is she paying monthly? Round all dollar values to the nearest cent.Honda Cars in Good ConditionModel/Year2000200120022003Element$5,887$6,080$6,225$6,622Odyssey$8,450$8,693$8,928$9,224Insight$4,384$4,661$5,006$5,440Accord$6,356$6,626$6,817$7,114