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Simonne Shodahl

1. Choose one of the following scenarios:


b. Buy a house c. Finance college
a. Buy a
car

2. Find a reasonable price for your purchase: I chose to purchase a 2019 Nissan LEAF s
40 kWh electric car for $29,990 on the Nissan website (https://www.nissanusa.com/pe-
nissan/lease-finance-payment-calculator/leaf/s-40-kwh)

3. Current interest rate: APR for this car is 4.99% for 63 months or 5.25 years.

4. Assuming there’s no down payment: Calculate your monthly payments over the life
of the loan/purchase.
a. To get monthly payments for this car I will use this payment formula:
𝑷𝑽 ∗ 𝒊(𝟏 + 𝒊)𝒏
𝑷𝑴𝑻 =
(𝟏 + 𝒊)𝒏 − 𝟏
PMT= monthly payment that we’re solving for
PV= loan amount ($29,990 in this case)
I= interest rate per month in decimal form divided by 12 (.0499÷12=
0.00415833333)
N= number of months of the loan (63 months)

$𝟐𝟗,𝟗𝟗𝟎∗𝟎.𝟎𝟎𝟒𝟏𝟓𝟖𝟑(𝟏+𝟎.𝟎𝟎𝟒𝟏𝟓𝟖𝟑)𝟔𝟑
i. 𝑷𝑴𝑻 =
(𝟏+𝟎.𝟎𝟎𝟒𝟏𝟓𝟖𝟑)𝟔𝟑 −𝟏

b. PMT/monthly payment amount for my Nissan car is $542.09 for 63


months with no down payment.

5. Still assuming there’s no down payment, calculate your total payments over the life of
the loan/purchase.
a. I’ll multiply my monthly payment of $542.09 by the number of months of my
loan, which is 63: $542.09x63 months= $34,151.67 are my total payments for my
car.
6. How much interest are you paying over the life of the loan/purchase?
a. Subtract the total payment amount from initial amount: $34,151.67-$29,990=
b. $4,161.67 is the interest
paid over the lifetime.

7. Assume you’re making a 10% down payment, calculate your monthly payments
over the life of the loan/payment.
a. First you must calculate the 10% down payment by multiplying the original
price/initial amount of the car by .10: $29,990 x .10 = $2,999

b. To find my new total amount I’ll multiply the original price/initial amount I’ll
multiply the original price/initial amount by .90: $29,990 x .90 = $26,991 is the new
total amount after
10% down
payment.

c. To find monthly payments with a 10% down payment I’ll use this formula below:
𝑷𝒐 ( 𝒓 )
𝒌
𝒅= 𝒓
(𝟏 − (𝟏 + ) −𝑵𝒌 )
𝒌

d= regular payments made and what we’re solving for


𝑷𝒐 = amount of payment after the 10% down payment ($26,991)
r = annual interest rate (.0499)
k= the number of compounding periods in a year (12)
n= length of my payment (63 months or 5.25 years)

.𝟎𝟒𝟗𝟗
$𝟐𝟔,𝟗𝟗𝟏( )
𝟏𝟐
d. 𝒅 = .𝟎𝟒𝟗𝟗 −𝟓.𝟐𝟓(𝟏𝟐) )
(𝟏−(𝟏+ )
𝟏𝟐
e. $487.88 are my regular
payments made.

8. Assuming you’re still making a 10% down payment, calculate your total payments
over the life of the payment.
a. Multiply the principal (monthly payment amount) by the number of months of the
payment: $487.88 x 63 months = $30,335.76 is my total
installment amount.
b. To get the total cost I’ll add the total installment amount plus the down payment
amount together: $30,335.76 + $2,999 = $33,334.76 is my
total cost.

9. How much interest are you paying over the life of the payment with the down
payment?
a. To get the total interest paid I’ll subtract the total installment paid amount from
the total payment amount: $30,335.76 - $26,991 = $3,344.76 is the
total interest paid.

10.What’s the absolute difference in interest from making no down payment to making a
10% down payment?
a. I’ll subtract the total interest from the total interest with 10% down payment:
$4,161.67 - $3,344.76= $816.91 is the
interest difference

11. Would you suggest making a down payment? I recommend making at least a 10%
down payment because it’s always best to make a down payment so you can avoid high
monthly payments that you’ll have to pay if you put zero down on your car.
There’s also only an $816.91 difference between the total without down payment
($34,151.67) and the total with a down payment ($33,334.76). It makes sense to
make a 10% down payment.
$34,151.67 - $33,334.76 = $816.91 is the total difference between the two
payments.
This means that my car payments will be $816.91 less if I do a 10% down
payment.

12. Write a paragraph summarizing why you picked the scenario and what you learned
from this project in the context of your scenario. I chose to buy a car because my 2008
Kia Rio is on its last leg. The 2019 Nissan LEAF S 40 kWh is electric, so it’s
environmentally friendly and requires barely any stops to recharge its battery since it can
drive approximately 150 miles when the battery is fully charged. Also, this car has an e-
pedal, meaning that you drive only on one single-pedal drive system instead of the
standard two pedals. There aren’t any brakes in this car! If you want to brake quickly you
would just take your foot completely off the pedal which would bring the car to a
complete stop. If you are heading for a red light you will just ease your foot off the pedal
slowly for the car to slow down, and then take your foot off the pedal completely when
you’re at the red light where the car will then completely stop once your foot is fully off
the pedal.

I’ve learned that buying a car isn’t as easy as just paying for it and leaving. My parents
bought me my first and current car in 2010 as a high school graduation gift, so I have
never had to think about buying a car. I didn’t know anything about car buying before
this project, but now I know so much, and I have a car in mind!