You decide that the time has come and you have to get rid of your current 90s-era

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Question:

You decide that the time has come and you have to get rid of your current 90s-era pickup truck and upgrade to a newer vehicle. To make this purchase, you will need to take out a loan to buy the car. Many different companies are offering you different loans with different terms, so you want to objectively compare them to determine which factors related to the loan (down payment, APR, term length) will have the largest impact on the amount of interest you pay! You decide on a modest (but brand new) 2022 Nissan Sentra, which sells for $20,670. Your old pickup truck will give you $1,500 for a down payment. The first loan that you are offered is for 72 months with an APR of 2.99%.

1. (10 pts) Determine the amount you will have to finance.

2. (10 pts) Determine the monthly payment for this loan.

3. (10 pts) Determine the total installment price and the finance charge.

4. (15 pts) Determine the monthly payment, total installment price, and finance charge for a loan with a similar APR but a term of 60 months.

5. (5 pts) What happens to the total installment price and finance charge when the term of the loan is shortened? What happens to the monthly payment?

6. (15 pts) Determine the monthly payment, total installment price, and finance charge for a 72-month loan with an APR of 3.51%.

7. (5 pts) Compare your answer from the previous question to your first loan. What happens to the total installment price and finance charge when the APR is increased? What happens to the monthly payment?

8. (20 pts) To try to avoid paying some interest, you double your down payment to $3,000 but stay with the 72-month loan with an APR of 2.99%. Determine the new amount you will need to finance, the monthly payment, total installment price, and the finance charge.

9. (10 pts) What does this example tell you about car loans? Which factors do you think has the largest impact on the amount you will pay? What loan options would you choose? Explain your answer.