Two years ago, you purchased a $18,000 car, putting $3,500 down and borrowing the rest....
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Two years ago, you purchased a $18,000 car, putting $3,500 down and borrowing the rest. Your loan was a 36-month fixed rate loan at a stated rate of 7.0% per year. You paid a non-refundable application fee of $100 at that time in cash. Interest rates have fallen during the last two years and a new bank now offers to refinance your car by lending you the balance due at a stated rate of 4.5% per year. You will use the proceeds of this loan to pay off the old loan. Suppose the new loan over the residual loan life requires a $200 non-refundable application fee. Given all this information, should you refinance? How much do you gain/lose if you do?
A.no,lose 69.59 B.yes,gain 69.59 C.no,lose 130.41 D,yes agin 130.41
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