Question

You (or your parents) are debating about whether to buy a new car for $19,072.00 or a used car for $15,635.00. Sales tax is 4.5%. You (or your parents) plan to make a down payment of $1,200.00 and your credit rating is fair. What is the difference in interest accrued by the end of the first month?

Credit New Car APR (%) Used Car APR (%)

Excellent 5.4 5.65

Good 5.95 6.35

Average 6.30 6.90

Fair 7.55 7.60

Poor 9.80 10.0

Answer 1

Answer:

$20.95

Step-by-step explanation:

Credit rating is fair ⇒ Secured APR = 7.00%

Loan amount = sale price + tax - down payment

new car = 19072 + (19072 x 0.045) - 1200 = 18730.24

used car = 15635 + (15635 x 0.045) - 1200 = 15138.575

Monthly interest = loan amount x 0.07 x 1/12

new car = 18730.24 x 0.07 x 1/12 = 109.26

used car = 15138.575 x 0.07 x 1/12 = 88.31

Difference = 109.26 - 88.31 = $20.95