Math interest rate question

[Justicedog]

I really should have paid more attention in math class I guess. I don't know why I can't figure this out.

What would I spend in interest on a car loan if I borrowed $20,000

if A: it was a 36 month loan with 0.9% APR

or if B: it was a 60 month loan with 2.9% APR


And can you show your work so that I can figure it out next time. :)

[newmommy1]

for 36 months at 0.9% total interest would be 278.71 (monthly payment $563.3)
for 60 months at 2.9% total interest would be 1509.14 (monthly payment $358.49)

I did not use math skills. Excel has a loan calculator built in, you just have to plug in the numbers.

[Justicedog]

Aha, I knew it wasn't as easy as multiplying .029 x $20,000 and getting $580 vs. .009 x $20K and getting $180. I knew the cost of the loan was much different than $400.

Thank you.

[dewoman81]

http://www.planningtips.com/cgi-bin/simple.pl - payment calculator

[kohlby]

I = Pe^(rt) for compounded countinously.
(Interest = Principle * e to the power of rate times time

But it looks like others found calculators that do it for you!

[Amy_G_]

http://mathforum.org/library/drmath/view/54612.html

I forget the rules for annual percentage rates on car loans, it depends on how often they figure the interest, whether it's compounded yearly, monthly, etc.

it's kind of backwards of his second example, in that you take the principal, deduct the payments and figure the interest.

http://www.cars.com/go/advice/financing/calc/loanCalc.jsp