A car dealer offers you two deals on a car that costs $16,000.Please calculate the monthly payment, given these two payment options the car dealer is offering.

Payment Option 1: You can finance the car for 60 months with no interest if you make a $1,000 down payment.

Payment Option 2: You can finance the car for 72 months (6 years) with 2% simple annual interest and no down payment. (Hint: To calculate simple annual interest, use the formula Interest = Principal * Rate * Time. Add the amount of interest to the price of the car.)

Which monthly payment amount is lower

Question

A car dealer offers you two deals on a car that costs $16,000.Please calculate the monthly payment, given these two payment options the car dealer is offering. 

Payment Option 1: You can finance the car for 60 months with no interest if you make a $1,000 down payment.

Payment Option 2: You can finance the car for 72 months (6 years) with 2% simple annual interest and no down payment. (Hint: To calculate simple annual interest, use the formula Interest = Principal * Rate * Time. Add the amount of interest to the price of the car.)

Which monthly payment amount is lower

anonymous · Answer

wow they r soooo similar its just a dollar off.
So option # 1 since you gave a downpayment of a $1000 we only need to pay them 15,000 so we divide 15000 by 60=250. So the monthly payment is $250

anonymous · Answer

The second option you wld use the simple interest formula:
Total amount = 16000+ (16000*.02*6)=17920
then we divide 17920 by 72=248.89
so the second option is lower

anonymous · Answer

thanks for your help