Barry Wood wants to buy a used car that costs $4,000. He has two possible loans in mind. One loan is through the car dealer; it is a three-year add-on interest loan at 6% and requires a down payment of $300. The second is through his credit union; it is a three-year simple interest amortized loan at 9.5% and requires a 10% down payment. (Round your answers to the nearest cent.) (a) Find the monthly payment for each loan. Dealer: $ Credit Union: $ (b) Find the total interest paid for each loan. Dealer: $ Credit Union: $ (c) Which loan should Barry choose? Why? He should choose the car dealer add-on interest loan because he pays less interest. He should choose the credit union simple interest loan because he pays less interest.
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For the dealer loan: - The car costs $4,000. - The down payment is $300. - Therefore, the amount financed = $4,000 - $300 = $3,700. For the credit union loan: - The car costs $4,000. - The down payment is 10% of $4,000 = $400. - Therefore, the amount financed = Show more…
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