Assume the car can be purchased for 0% down for 60 months (in lieu of rebate).
A car with a sticker price of $42,600 with factory and dealer rebates of $5,100
Find the monthly payment if financed at 2.5% add-on interest for 60 months.
a) Monthly Payment = $42,800/60 which is approximately $713.3 (b) Add-on interest = $42,800 * 2.5%/year * (60/12) years = $5,350 So, Monthly Payment = ($42,800 - $5,100)/60 = $802.5 (c) Not sure (d) Looking at the monthly payments in (a) and (b), the add-on rate is preferable.
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