Chris bought a new car for 12,500 he made 3,000 down payment and financed the rest for 14.5% for 36 months for 3 years how much less would his total be for same loan 24 months 2 years

The requirement here is to determine the difference between total loan repayments when the period of loan is 36 months and the total repayments when the period of loan is 24 months instead.

Note the loan amount is the excess of purchase price over the down payment required.

loan amount=12,500-3,000

loan amount=9,500

The monthly payment in each case can be determined using the present value formula of an ordinary annuity.

PV=monthly payment*(1-(1+r)^-N/r

36-month loan month payment

PV=loan amount=9,500

monthly payment=X

r=monthly interest rate=14.5%/12=0.0120833333333333

N=number of monthly payments=36

9,500=X*(1-(1+0.0120833333333333)^-36/0.0120833333333333

9,500=X*(1-(1.0120833333333333)^-36/0.0120833333333333

9,500=X*(1-0.6489543809903260)/0.0120833333333333

9,500=X*0.3510456190096740/0.0120833333333333

9,500=X*29.0520512283869000

X=9,500/29.0520512283869000

X=327.00

Total month repayments=327.00*36

Total month repayments=11,772.00

24-month loan month payment

PV=loan amount=9,500

monthly payment=X

r=monthly interest rate=14.5%/12=0.0120833333333333

N=number of monthly payments=24

9,500=X*(1-(1+0.0120833333333333)^-24/0.0120833333333333

9,500=X*(1-(1.0120833333333333)^-24/0.0120833333333333

9,500=X*(1-0.7495652524008220/0.0120833333333333

9,500=X*0.2504347475991780/0.0120833333333333

9,500=X*20.7256342840700000

X=9,500/20.7256342840700000

X=458.37

Total month repayments=458.37*24

Total month repayments=11,000.88

Difference in total payments=11,772.00-11,000.88

Difference in total payments=771.12

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