Answer:
Car Loan Calculator
a) Option B has a higher monthly payment. It pays back $291 per month, whereas Option A pays back $189.
b) Option A has you pay more in total. It pays back a total of $11,323 as against Option B's $10,469.
c) I prefer Option B's payment method. I will save $854 ($11,323 - $10,469) and exit the loan bondage faster.
Explanation:
Using the Google car loan calculator, I obtained the following results:
Options:
a) pay back the loan at 5% interest for 60 months (5 years):
Car loan calculator
Monthly cost Maximum loan
Loan amount
$10,000
Interest rate (%) 5
Loan period (months) 60
Total cost of car loan$11,323
Monthly payments$189
b) pay back the loan at 3% interest for 36 months (3 years):
Car loan calculator
Monthly cost Maximum loan
Loan amount $10,000
Interest rate (%) 3
Loan period (months)
36
Total cost of car loan$10,469
Monthly payments$291
