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You borrow $26,500 to purchase a brand new car. The interest rate is 6%, and the...

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Finance

You borrow $26,500 to purchase a brand new car. The interestrate is 6%, and the dealer says that you can pick between a 4-yearor 6-year loan. How much more interest would you have to pay onyour loan if you selected the 6-year loan over the 4-year loan.

Answer & Explanation Solved by verified expert
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Step 1 Calculation of total interest paid for 6 year Loan We can use the present value of annuity formula to calculate the monthly loan payment Present Value of annuity P x 1 1rnr Present value of annuity loan amount 26500 P monthly loan payment r interest rate per month 612 0005 n number of monthly    See Answer
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You borrow $26,500 to purchase a brand new car. The interestrate is 6%, and the dealer says that you can pick between a 4-yearor 6-year loan. How much more interest would you have to pay onyour loan if you selected the 6-year loan over the 4-year loan.

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