Mathematics

Question

Jose has decided to pay off his $20,000 car loan. He has been making payments of $444.89 and has 15 months left to pay. His loan has a 12% interest rate and is to be paid off in 5 years. How much will he need to make his payment to fully pay off the car?

2 Answer

  • The total amount of loan payable in 5 years = amortization *60
    where:
    monthly amortization = $444.89
    Total amount of car loan = $26263.4
    Remaining balance =15 months  x  monthly amortization
    Remaining car loan balance = $6673.35
    Jose needed an amount of $6673.35 to fully pay his five-year car loan.
  • Answer:

    6,168.35

    Step-by-step explanation:

    Periodic interest rate 12%/12 = 1%

    h = (5x12) - 15 = 45

    The prepayment formula gives

    $20,000(1+0.01)^45 + (1-(1+0.0)^45/0.01) = 6,168.35

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