Car Payment Project

By: Eugenia Witherspoon and Jordyn Byers

This is a 2015 Jeep Wrangler Unlimited Rubicon 4x4 SUV.

Concord, Hendrick. '2015 Jeep Wrangler Unlimited Rubicon 4X4 Concord, NC | 1C4BJWFG0FL675352'. Hendrickchryslerdodgejeepramofconcord.com. N.p., 2015. Web. 8 May 2015.

A= Payment Amount per period

P= Initial Principal (Loan)

R= Interest rate per period

N= Total number of payments or periods

$42,400 is the initial amount.

I put down 20% of that which is $8,480.

.2*42,400 = $8,480

Loan is $33,920.

Structure #1

P= 33,920

R= 6% ÷ 12= .005 per period

N= 4•12=48 total

The monthly payment for 48 months is $796.61

Amount paid during the life of the loan: 48•796.61= $38,237.28

Interest paid during the life of the loan: 38,237.28-33,920= $4,317.28

Structure #2

P: $33,920

R: 5.5%/12=.0046 per period

N: 5*12=60 total periods

The monthly payment for 60 months is $647.91

Amount paid during the life of the loan: 60•647.91= $38,874.60

Interest paid during the life of the loan: $38,874.60-33,920= $4,954.60

Structure #3

P: $33,920

R: 5%/12=.004167 per period

N: 6*12=72 total periods

The monthly payment for 72 months is $546.29

Amount paid during the life of the loan: 72•546.29= $39,332.88

Interest paid during the life of the loan: $39,332.88-33,920= $5,412.88

Analysis Questions

  1. Compare the three car payment structures. In terms of its monthly payment, which payment structure would be the least expensive?

In terms of monthly payment, structure #3 would be the least expensive.

2. Compare the three car payment structures. In terms of the amount paid in interest, which payment structure would be the least expensive?

In terms of the amount paid in interest, structure #1 would be the least expensive.

3. Compare the three car payment structures. In terms of the amount paid in total over the life of the loan, which payment structure would be the least expensive?

In terms of the amount paid in total over the life of the loan, structure #1 would be the least expensive.

4. If you were to determine which structure was best suited for YOU personally, which would you choose and why? (Be sure to consider some of the different factors that affect car-buyers. BE SPECIFIC

The structure we chose that would be best suited for us was structure #3. Although structure #3 has the highest payments for the amount paid during the life of the loan, as well as the interest paid during the life of the loan, the monthly payment is the lesser of the three. We had to consider that when most people are old enough to buy a car they have other things to pay for, and take care of. Having a smaller monthly payment would make things easier month-by-month, as far as money is concerned. Even though the amount and interest paid during the life of the loan is fairly high compared to the others, we considered the fact that the loan was over 6 years. That’s a fair amount of time to get things situated and to make sure to save up enough money.

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