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23 October, 22:59

You have just purchased a car and, to fund the purchase, you borrowed $27,500. If your monthly payments are $515.27 for the next 5 years, what is the APR of the loan?

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Answers (2)
  1. 24 October, 01:58
    0
    Answer: The APR is 2.48%

    Explanation:

    The annual percentage rate is the total amount to be paid yearly to support the purchase of a car. It is given by the formula;

    (Fees + Interest/Principal/n * 365) * 100

    In the given question,

    Interest=12.4% or $3416.2

    Principal=$27500

    Number of days=365*5

    =1825

    Interest was gotten by multiplying the monthly payment which is $515.27 by 12. The result was then multiplied by 5 to give $30916.2. This is then subtracted from the principal amount.

    Therefore we have;

    ($3416.2 / $27500 / 1825 * 365) * 100

    =2.48%

    Note that fees are not usually charged in car loans.
  2. 24 October, 02:23
    0
    Answer: APR of the loan is 2.48%
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