Hot Wheel Project

Hour 7 Finance Car

Hello, I'm looking to buy a car. I make $65,000 dollars every year. I need to calculate what I can afford to buy. Below I calculated what I averagely spend per month. I only have a certain amount of money I can use for car payments. Therefore, I need to figure out the price of a car I can buy with the interest rate of 3.75%.

Yearly and Monthly Payments

Salary: 65,000

y= year m= month

Taxes y= 16,250 m= 1,354.16

Housing y= 22,750 m= 1895.82

Car payment 10% y= 6500 m= 541.66

Car payment 5% y= 3,250 m= 270.83

Food y= 9,750 m= 812.50

Savings y=3250 m=270.83

Medical y= 1,950 m= 162.50

Miscellaneous y= 1,300 m= 108.33

Link to car:

Price of car: 22,998

My Plan

Car prices I could Afford

3 year plan: 18415.72

4 year plan: 24108.75

5 year plan: 29592.00

Car Price of the car I chose: 22,998

Budget monthly: 541.66

3 year plan: 676.61 per month (over budget)

4 year plan: 516.69 per month (in budget)

5 year plan: 420.97 per month (in budget)

I chose the 4 year plan and what I will actually spend on the car over four years in 24800.16 over the course of the Loan.

Extra Credit

Mrs. O’Connell wants to buy a new car that costs $24516.00. The car dealership is offering 0% interest for a 5 year loan. They also offer a $4000 rebate instead of 0% financing with 3.75% interest. Help Mrs. O’Connell determine which is the better deal? Show work and justify your answer.

5 year with 0% interest = $408.60 monthly payment and what she would spend over the coarse of the loan $24,516.00.

5 year with 3.75% interest and $4,000 rebate = 375.54 monthly payment and what she would spend over the coarse of the loan $22,532.40.

Overall the cheapest way would be the 5 year plan with 3.75% interest and $4,000 rebate.