Car Payment Project

By: Alexis Summerville

Model Of The Car.

2016 Ford Mustang GT Premium Convertible, 5.0L Ti-VCT V8 Engine, 6-Speed Manual Transmission. The car itself costs $41,895, but I had some personal adjustments made to my car, so it's specially made just for myself.


The accessories I got to go with it were the cargo area protector, which is basically just a mat to put in my trunk so that nothing messes up the trunk of my car, but that costed $100. I also got some all weather floor mats with the "pony logo." Those were $95.


For the exterior of the car I got a spare wheel and tire so if I were to get a flat tire I would have a spare, and that costed $195. The other exterior thing I got was a reverse sensing system, so if I'm reversing I will be sure not to hit anything behind me. That costed $295.


For the Interior I got a premier trim with a color accent group, so basically just black leather with red leather in the middle of the seats, but that was $395. I also got a voice activated navigation system, so that way I won't be distracted while I'm driving and trying to use my GPS as well. I can just say where I want to go and it will automatically put it in the navigation system in my car.


So what I payed for was the car's initial cost before I added anything, which was $41,895, all of the extra things I added to make it look nicer, which in all costed $1,875, and the destination charges, so after Ford makes it wherever they do they can have it brought to me instead of me going and getting it, and that was $900.


The total cost was $44,670. My downpayment I would be paying, which is 20 percent, would be $8,934. And the loan, or left over would be $35,736.

Structure 1

Monthly Payment


R- 6% ÷ 12 = 5% ⋙ (.005) Per Period


N- 4(12) = 48 Total Periods


A- 35736(.005(1.005)⁴⁸) ÷ ((1.005)⁴⁸-1)

A- 35736(.0063524458 ÷ .2704891611)

A- 35736(.023485029) = $839.26


Paid In Total


839.26(12) = 10071.12


10071.12

10071.12

10071.12

10071.12

+__________

$40,284.48


Interest Paid


6+6+6+6 = 24 or 6(4) = 24 ⋙ (.24)


40,284.48(.24) = $9,668.28

Structure 2

Monthly Payment


R- 5.5% ÷ 12 = .4583333333% ⋙ (.004583333333) Per Period


N- 5(12) = 60 Total Period


A- 35736(.004583333333(1.004583333333)⁶⁰) ÷ ((1.004583333333)⁶⁰ -1)

A- 35736(.006030309 ÷ .3157037725)

A- 35736(.0191011623) = $682.60


Paid In Total


682.60(12) = 8191.20


8191.20

8191.20

8191.20

8191.20

8191.20

+________

$40,956


Interest Paid


5.5+5.5+5.5+5.5+5.5 = 27.5 or 5.5(5) = 27.5 ⋙ (.275)


40,956(.275) = $11,262.90

Structure 3

Monthly Payment


R- 5% ÷ 12 = .4166666667% ⋙ (.004166666667) Per Period


N- 6(12) = 72 Total Period


A- 35736(.004166666667(1.004166666667)⁷²) ÷ ((1.004166666667)⁷² -1)

A- 35736(.0056209073 ÷ .349017442)

A- 35736(.0161049328) = $575.53


Paid In Total


575.53(12) = 6906.36


6906.36

6906.36

6906.36

6906.36

6906.36

6906.36

+__________

$41,438.16


Interest Paid


5+5+5+5+5+5 = 30 or 5(6) = 30 ⋙ (.30)


41438.16(.30) = $12,431.45

Analysis Question #1

When comparing the three car payments I found that payment structure 3 would be the least expensive each month. However, you would be paying it for a longer amount of time than the other two structures.

Analysis Question #2

When the three car payments are compared in terms of the amount paid in interest; payment structure 1 was found to be least expensive. Also, you would be paying that payment for a shorter amount of time then the other two structures.

Analysis Question #3

While comparing the three car payments for which was cheapest in total, I found payment structure 1 was the cheapest. Although you are paying more each month you pay for less months and overall end up paying less interest on the car.

Analysis Question #4

If I had to choose which structure would be best suited for myself I would have to consider a few things first. Things like how much would I be paying a month, for how long would I be paying, and how much money I actually make. The average American makes around $2,250 dollars a month, which is not a lot at all. Considering those things I would most likely pay using structure 3. Is it more in the end? Yes, but if I am in with the average Americans, which I am going to assume I am, I am not going to get paid enough to pay using the other two structures. I would rather pay using structure 1 because, you pay it off quicker, and it is cheaper in the long run. Sadly, I wouldn't be able to do that because that would only leave me with $1410.74 for the rest of the month and obviously I would have other bills to pay. It would just work out better if I were to choose structure 3, so I would have more money left over in the month to spend on other things.