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How to calculate the interest rate for a car finance...?
Car value = $65,000
Repayments $1085/month for 59 months,
At the 60th month, must pay residual amount of $22,000
Please help...
Most probable interest calculated as reducing interest calculated monthly...(?)
2 Answers
- Anonymous1 decade agoFavourite answer
9.7% interest will leave a 22k balloon payment after 60 months, but you'll also have to make the last payment of $1085.12
- Anonymous1 decade ago
The interest rate satisfies the following equation:
Loan Amount = 65,000 - 22,000 = 43,000
43,000 = 1,085 * (1 - (1+r)^-59)/r, where r is the interest rate
So, 39.63 = [1 - (1+r)^-59] / r
r = approximately 1.5% per month or 18% per year. You're getting ripped off