Problem
Tom and Sara Bell have decided to buy a new car that they estimate will cost $35,000 and are wondering how they can finance this purchase. They own their home which is worth $850,000 and have a mortgage of $210,000, and monthly mortgage payments of $2,200. Annually they pay $4,000 in property taxes and $1,440 in heating costs. They have no other debt. (i) List the different types of personal loan product options available to finance the purchase of a car and the pros and cons of each. • Credit Cards • Lines of Credit • Term Loans (ii) If their annual gross income is $115,000, what could they afford in terms of a monthly car payment?