Use the Loan Amortization Excel spreadsheet to answer the following questions in the five scenarios.

1. Let's turn to thinking about a car loan. A car loan is repaid (amortized) over a shorter period of time. Now, you are choosing between buying a new or used car. The used car has relatively low mileage and is in good condition. Both vehicles come with good warranties. You can borrow either $15,000 (new) or $5,000 (used) over 3 years at 6.5% interest.

How much more is the monthly payment for the $15,000 loan than the $5,000 loan? That is, calculate the payment for borrowing $15,000 at 6.5% interest for 3 years then substract the payment for borrowing $5,000.

(Enter dollars and cents as numbers only, no dollar sign or commas.

2. How much more is the total interest for the $15,000 loan than the $5,000 loan? That is, calculate the total interest for borrowing $15,000 at 6.5% interest for 3 years then subtract the total interest for borrowing $5,000.

(Enter dollars and cents as numbers only, no dollar sign or commas.)

3.Will you buy new or used? Explain by comparing benefits and costs. Also discuss from where the funds will come in your zero-based budget when you purchase a car.

4. Your credit history will impact the interest rate that lenders are willing to offer you. If you have a high credit score, you will pay a lower interest rate. If you have a low credit score, you will pay a higher interest rate.

What are your monthly payments and total interest if you borrow $15,000 over 3 years at 13.0% interest because of bad credit? See cells E8 and E10, respectively.

Using this data and comparing it to the lower interest earned by a positive credit history, describe what you think about the relationship between your credit score and interest rates. Use economic reasoning to answer.