You want to purchase a $50,000 car.
(a) You are able to obtain a 7-year loan at 6.75% for the full amount. What would your monthly payment be?
(b) You decide instead to save money first and then purchase the car. You earn 3-5% interest on your savings account. If you save the same amount each month as that calculated in
(a), how many months would you have to save to be able to purchase the car? (Round up.)
(c) How much more do you end up paying for the car (out of your own pocket) if you borrow than if you save first? You purchase $240,000 home.
(a) You put down a 10% down payment and take out a 30-year loan at 5-25%. When the loan has been paid off, how many dollars have you paid for the house total?
(b) If instead you were able to carry a 15-year loan at 5.00% for the same house, how much would the house cost you now?
(c) If you saved the amount of the loan instead at 3-5% interest, making monthly deposits equal to the payments on the 15-year loan, how long would you have to save? (Round up the number of months.)
(d) How much would the house cost you out of pocket in this case?
With a given interest rate, which type of mortgage makes you pay the most interest over the life of the loan, a 15-year or a 30-year loan?
With a given interest rate, which type of mortgage makes you pay the most principal over the life of the loan, a 15-year or a 30-year loan?