After visiting several automobile dealerships, Richard selects the car he wants. He likes its $11,000 price, but financing through the dealer is no bargain. He has $2,200 cash for a down payment, so he needs an $8,800 loan. In shopping at several banks for an installment loan, he learns that interest on most automobile loans is quoted at add-on rates. That is, during the life of the loan, interest is paid on the full amount borrowed even though a portion of the principal has been paid back. Richard borrows $8,800 for a period of four years at an add-on interest rate of 8 percent.

Question

What is the annual percentage rate (APR)? (Enter your answer as a percent rounded to 2 decimal places.)

Answer 1

8.33%