A car dealer will sell you a used car for $7,635 with $635 down and payments of $267.36 per month for 36 months. What is the simple interest rate?

Question

jim_thompson5910 · Answer

The dealer will finance (ie loan you) 7635 - 635 = 7000 dollars

So P = 7000

You pay 267.67 per month for 36 months. So you pay 267.67*36 = 9636.12 over the total life of the loan (excluding down payment)

This means A = 9636.12

The rate is unknown. So we'll call it x. So r = x

The time (in years) is 36/12 = 3. So t = 3

jim_thompson5910 · Answer

Plug all this info into 

A = P(1+rt)

and solve for x

anonymous · Answer

Wouldn't you just take 9636.13-7000 to find the interest?

jim_thompson5910 · Answer

that's another way you can do it

jim_thompson5910 · Answer

9636.12-7000 = 2636.12 is the amount of interest you pay

anonymous · Answer

Is that different from simple interest?

jim_thompson5910 · Answer

no it's just taking another route to the same answer

anonymous · Answer

That' what I thought. Thanks

jim_thompson5910 · Answer

you're welcome