Car Loan Calculations and Strategies

This video tutorial explains how to calculate monthly car payments for car loans using a specific formula. It provides two examples: Sally's 10-year loan and Megan's 20-year loan, detailing each step of the calculation process. The video also demonstrates how to use online calculators to verify results and offers tips on reducing total interest paid on loans.

What is the formula used to calculate the monthly car payment?

• Principal plus annual interest rate divided by number of payments

• Principal divided by annual interest rate times number of payments

• Principal times annual interest rate divided by number of payments

• Principal minus annual interest rate times number of payments

In Sally's example, what is the value of 'n' in the formula?

• 10

• 12

• 30

• 6

What is the final monthly payment amount for Sally's car loan?

• $300.00

• $333.06

• $350.00

• $360.00

What is the total interest paid on Sally's loan?

• $9,967.38

• $10,000.00

• $8,500.00

• $12,000.00

What is one benefit of using an online loan calculator?

• It provides a random estimate

• It confirms the accuracy of manual calculations

• It increases the loan amount

• It extends the loan term

What is the principal amount for Megan's loan after the down payment?

• $60,000

• $90,000

• $80,000

• $70,000

What is the annual interest rate for Megan's loan in decimal form?

• 0.06

• 0.05

• 0.04

• 0.03

What is Megan's monthly car payment?

• $600.00

• $550.00

• $527.96

• $500.00

Which of the following is a strategy to reduce total interest paid on a loan?

• Extend the loan term

• Decrease the interest rate

• Increase the loan amount

• Make fewer payments

How does reducing the loan term affect the total interest paid?

• Increases total interest

• Doubles the total interest

• Decreases total interest

• Has no effect