1. Rayleene is getting a loan to buy a used car from a seller on Kiji. The price of the car is $9200.00. She has a down payment of $500.00 and is able to negotiate an interest rate of 4.5% from her bank. Rayleene is trying to decide whether to get her loan for 3 or 4 years. a. Use an online personal loan calculator to fill in the following table to help her decide: Amount of Principal Interest Rate Length of Loan 3 year loan 4 year loan Monthly Payment Total Payments (Monthly Payment x# of months) Total Cost of the Loan (Total Payments - Principal) b. Should Rayleene take her car loan out for 3 or 4 years? Why?

1. Rayleene is getting a loan to buy a used car from a seller on Kiji. The price of the car is $9200.00. She has a down payment of $500.00 and is able to negotiate an interest rate of 4.5% from her bank. Rayleene is trying to decide whether to get her loan for 3 or 4 years. a. Use an online personal loan calculator to fill in the following table to help her decide: Amount of Principal Interest Rate Length of Loan 3 year loan 4 year loan Monthly Payment Total Payments (Monthly Payment x# of months) Total Cost of the Loan (Total Payments - Principal) b. Should Rayleene take her car loan out for 3 or 4 years? Why?

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter7: Using Consumer Loans

Section: Chapter Questions

Problem 8FPE

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Concept explainers

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.

Question

1. Rayleene is getting a loan to buy a used car from a seller on Kijiji. The price of the
car is $9200.00. She has a down payment of $500.00 and is able to negotiate an
interest rate of 4.5% from her bank. Rayleene is trying to decide whether to get her
loan for 3 or 4 years.
a. Use an online personal loan calculator to fill in the following table to help her
decide:
Amount of Principal
Interest Rate
Length of Loan
3 year loan
4 year loan
Monthly Payment
Total Payments
(Monthly Payment x # of months)
Total Cost of the Loan
(Total Payments – Principal)
b. Should Rayleene take her car loan out for 3 or 4 years? Why?

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