A car dealer offers you two deals on a car that costs $14,000. 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 $2,000 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?
Is it option 1?

Question

A car dealer offers you two deals on a car that costs $14,000. 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 $2,000 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? 
Is it option 1?

anonymous · Answer

hey im gunna try to figure this one out but give me a minute or two

anonymous · Answer

Ok thanks! :)

anonymous · Answer

first off: is annual interest once a year?

anonymous · Answer

I think its option 1 but Im not sure

anonymous · Answer

ok

anonymous · Answer

I think so?

anonymous · Answer

Option 1:
Each Month cost: $233.33
Down payment: $2,000
Total money spent: $16,000

Option 2:
Annual interest in total: $1,680
Each Month cost: $194.44
Total money spent: $15,680

In this case option two is better hope this helps

anonymous · Answer

Thank you so much! You have no Idea how much this helped! :D

anonymous · Answer

really cool thx