1) What 3 factors influence the amount of a car payment?
2) What does amortization mean?9) What are the determining factors in choosing one payment plan over another?
Use the TI-82 Car Payment Program to help you determine the following:
| Car Cost | Down Payment | Amount Financed | Annual Interest Rate | Length of Payments | Monthly Payments | Total cost of Payments | Final Cost of car | Financing charge | |
|---|---|---|---|---|---|---|---|---|---|
| 3) | $16,000 | $0 | . | 8% | . | . | . | . | . |
| 4) | $16,000 | $2,500 | . | 8% | 5 years | . | . | . | . |
| 5) | $16,000 | $2,500 | . | 6.5% | 48 months | . | . | . | . |
| 6) | $16,000 | $2,500 | . | 6.5% | 60 months | . | . | . | . |
| 7) | $16,000 | $6,000 | . | 9.2% | 3 years | . | . | . | . |
| 8) | $16,000 | $6,000 | . | 5.5% | 26 months | . | . | . | . |
A car dealer offers two special deals.
Option 1: You can purchase a car for $13,500; receive $1500 cash back (which you would use as a down payment) and the interest rate would be 9.5%. (Time period is 4 years)
Option 2: You can purchase a car for $13,500; receive no cash back, finance the whole amount, and the interest rate would be 2.1%. (Time period is 4 years)
10) Determine which of these plans you would choose. Explain your choice completely.