Charlotte Brakmann purchased a car for $28,000. She wanted to finance the car with the...
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Charlotte Brakmann purchased a car for $28,000. She wanted to finance the car with the dealer, who claimed the interest rate was only 3%. Charlotte wanted to pay off the loan with equal monthly payments over a 3-year period. Her payments were calculated as follows:
Loan Amount $28,000
Credit Check Fee 100
Title Transfer Fee 25
Interest 2,520 = (0.03)(3)($28,000)
Total 30,645
Monthly Payment 851.25 = $30,645/36
What was the effective annual interest rate paid by Charlotte?
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