Veronica has saved $5,000 that will be a down payment on a new car that can be purchased for $38,000.
a The loan to finance this will have a rate of 7.125% APR compounded monthly. What will the monthly payments on the car be if the loan is for 4 years?
b How long would it take to pay off the loan if she would pay $1,000 monthly?
c Veronica has been offered a lease for this car with payments of $600 a month for 5 years. There would not be any down payment. As happens with leases, she would essentially receive the full value of the car today and she would return the car to the dealer at the end of the lease (essentially paying out the value of the car at that time).
The value of this car in 5 years, with no damage or excessive mileage, is expected to be $12,000. What APR with monthly compounding would she be paying?