You want to buy a car. The loan amount will be $17,000. The company is offering a 2% interest rate for 60 months (5 years). What will your monthly payments be?

To calculate your monthly car payments, we can use the formula for the **monthly payment on an amortizing loan**:

\[
M = \frac{P \times r(1+r)^n}{(1+r)^n - 1}
\]

Where:
- $M$ is the monthly payment
- $P$ is the loan amount (principal), which is \$17,000
- $r$ is the monthly interest rate (annual interest rate divided by 12)
- $n$ is the total number of payments (loan term in months)

### Step 1: Identify key values
- **Loan amount (P)**: \$17,000
- **Annual interest rate**: 2% or 0.02
- **Loan term (n)**: 60 months (5 years)

### Step 2: Calculate the monthly interest rate
\[
r = \frac{0.02}{12} = 0.0016667
\]

### Step 3: Calculate the monthly payment

I'll calculate this for you now.

Your monthly car payment will be approximately **$297.97**.

Would you like a detailed breakdown or have any questions?

Here are 5 related questions to deepen understanding:
1. What would the monthly payment be if the interest rate was 3% instead of 2%?
2. How much total interest will you pay over the 5-year period?
3. How would the monthly payment change if the loan term were 48 months instead of 60?
4. What happens to your monthly payment if you make a $2,000 down payment?
5. How can early payments or extra payments affect the total interest paid?

**Tip:** The longer the loan term, the lower the monthly payment, but you’ll pay more in interest overall.

Find out how to calculate your monthly car payments for a $17,000 loan with a 2% interest rate over 60 months. Learn the step-by-step breakdown, including the use of the loan amortization formula, interest rates, and algebraic concepts. Suitable for high school students and financial learners.

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