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 $3,000 down payment.

Payment Option 2: You can finance the car for 72 months (6 years) with 1% simple annual interest and no down payment. (Hint: To calculate simple annual interest, use the formula Interest = Principal * Rate * Time (in years). 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 $3,000 down payment.

Payment Option 2: You can finance the car for 72 months (6 years) with 1% simple annual interest and no down payment. (Hint: To calculate simple annual interest, use the formula Interest = Principal * Rate * Time (in years). Add the amount of interest to the price of the car.)

Which monthly payment amount is lower?

anonymous · Answer

I have this. Is everything right in it, and does it look Ok?

Payment Option 1 is lower.
 
Part 1:
$16,000 - $3,000 = $13,000
$13,000 / 60 = $216.67
 
Part 2:
$16,000 * 0.01 * 6(yrs) = $960.00
$16,000 + $960.00 = $16,960

anonymous · Answer

Oh and the monthly payment for Part 2 would be $282.66 per month

anonymous · Answer

Seems like your right.