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FIN 420 - Week 4 - DQ 2 - part time I needed the car at the...

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Visit a site such as www.bankrate.com to determine current rates for both a 60- month and a 36-month loan on a new car where the buyer must finance $20,000. Using the loan calculator, what is the difference in monthly payments between the 60-month loan and the 36-month loan? Review the amortization tables. What is the difference in total interest one would pay over the life of these two loans? What do these differences show you about the true cost of the car? I  decided to do my own auto loan from two years ago, hopefully that's okay. I'm  regretting my decision back then and I remember fully how my mother told me to do  the 36 month loan instead of the 60 month but I didn't listen as usual. I  financed $8,559.48 at 8.9% back in May of 2009. The monthly payment on a 36  month was $271.79 while a 60 month payment was $177.26. I chose the 60 month  payment because the payment was smaller, I was still in college and I only worked 
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Unformatted text preview: part time. I needed the car at the time since my old car was becoming a money pit. The difference of $94.53 seems silly now close to 3 years later, but it was a lot for me back then. So the part where I want to vomit comes now. If I had chosen the 36 month loan, I would have paid a total of $1,225 in interest for a total of $9,784.48 for the car. However, I chose the 60 month loan and I will be paying a total of $2,076.46, for a total of $10,635.94. It's a difference of $851.46 for the car in the end. These differences show that the true cost of the car is determined by how long you are paying off the car, which I understood then but I decided to prolong my loan period and thus pay more for it....
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