You want to buy a car. The loan amount will be $31,000. The company is offering a 4% interest rate for 36 months (3 years). What will your monthly payments be?

Answer 1

To calculate the monthly payments for an auto loan, you can use the formula for the monthly payment amount on a fixed-rate loan.

The formula for calculating the monthly payment amount is:
Monthly Payment = [P × (r/n) × (1 + r/n)^nt] / [(1 + r/n)^nt - 1]

Where:
P = Loan amount ($31,000)
r = Annual interest rate (4% or 0.04 as a decimal)
n = Number of payments per year (12)
t = Loan term in years (3)

Plugging in the values into the formula:

Monthly Payment = [31,000 × (0.04/12) × (1 + 0.04/12)^(12*3)] / [(1 + 0.04/12)^(12*3) - 1]

Calculating this equation gives the monthly payment amount.