A car dealer will sell you a used car for $6,298 with $798 down and payments of $165.51 per month for 48 months.

Question

i found the total amount paid which is 8742.48
and interest paid is 2444.48
how do i find the interest rate?

Answer 1

So you were financing $5500 for 48 months with a monthly payment of $165.51

let the monthly interest rate be i
165.51( 1 - (1+i)^-48 )/i = 5500

This type of equation is very difficult to solve.
In the "olden days" we used methods such as interpolation to get approximate answers.
Now we have programs and webpages such as
Wolfram to do it for us.
http://www.wolframalpha.com/input/?i=solve+165.51%28+1+-+%281%2Bx%29%5E-48+%29%2Fx+%3D+5500

Notice I changed i to x , since Wolfram reads i as the complex number √-1

so i = .016137 for an annual rate of (.016137)(12)
or appr 19.36 % compounded monthly.

check:
165.51(1 - 1.016137^-48)/.016137
= 5499.996 , not bad