when interest rates are low some automobile dealers offer loans a43823
When interest rates are low, some automobile dealers offer loans at 0% APR, as indicated in a 2016 advertisement by aprominent car dealership, offering zero percent financing or cash back deals on some models. Zero percent financing means the obvious thing-that no interest is being charged on the loan. So if we borrow $1,200 at0% interest and pay it off over 12 months, our monthly payment will be $1,200/12 = $100. Suppose you are buying a new truck at a price of $29,000. You plan to finance your purchase with a loan you will repay over two years. The dealer offers two options: either dealer financing with 0% interest, or a $2,900 rebate on the purchase price. If you take the rebate, you will have to go to the local bank for a loan (of $26,100) at an APR of 5.5%. What would your monthly payment be if you took the rebate? (Round your answer to the nearest cent.)
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