Tutorial Exercise You purchase a sofa costing $1,030 by taking out a 9% add-on interest installment loan. The loan requires a 15% down payment and equal monthly payments for 4 years. How much are your monthly payments? Step 1 An add-on interest loan adds simple interest to the amount of money financed. The loan for the sofa required a 15% down payment, so the amount financed can be calculated as follows. amount financed = purchase price(100% - down payment percent) The percentages must be converted to decimals. This gives 100% - 15% = 85% = Substitute this decimal value and the purchase price of the sofa, $1,030, into the formula to find the amount that was financed. amount financed = purchase price(100% - down payment percent) = 1,030( $