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-   -   Loan Payments (https://www.askmehelpdesk.com/showthread.php?t=146699)

  • Oct 30, 2007, 11:33 AM
    msbionik
    Loan Payments
    Hi everyone,

    I am new to this site and I appreciate any help you offer.

    I just want to make sure I am correct because I read into things and confuse myself even more!

    Here goes: If you take out an $8000 car loan that calls for 48 monthly payments at an APR of 10%, what is the monthly payment? What is the effective annual percentage rate on the loan?


    I have: 1.2% monthly rate at a payment of 96 per month..?

    Thanks in advance!
  • Oct 30, 2007, 11:45 AM
    katieperez
    Hi there! $8,000.00 @ 10% for 48 months would put your payment at $202.90. I'm not sure what you mean as far as what is the effective APR? On the above payment, $66.67 would be applied to interest and $136.23 would be applied to the principle in month one, $65.63 interest & $137.37 principle in month two, $64.39 interest & $138.51 principle in month three and so on and so forth. That's of course assuming only minimums are being paid each month. If it is a simple interest contract, then anything paid above the minimum due each month, gets applied directly to the principle.
  • Oct 30, 2007, 12:52 PM
    msbionik
    Quote:

    Originally Posted by msbionik
    Hi everyone,

    I am new to this site and I appreciate any help you offer.

    I just want to make sure I am correct because I read into things and confuse myself even more!

    Here goes: If you take out an $8000 car loan that calls for 48 monthly payments at an APR of 10%, what is the monthly payment? What is the effective annual percentage rate on the loan?


    I have: 1.2% monthly rate at a payment of 96 per month...???

    Thanks in advance!

    Hi KatiePerez,

    Thanks for responding... What would the effective rate be then? I believe we are supposed to divide the APR by 12 for the amount of months per year and I now got 0.8333. Would this be the effective rate?
  • Oct 31, 2007, 03:07 PM
    Best701982
    Why do you need the effective rate? Typically the effective rate is used on home loans which incorporates closing cost and points. A car loan is typically discussed at the full rate. I hope that you rate isn't 1.2% x 12 which would 14.4% annually!!

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