You want to buy a $26,000 car. The company is offering a 2% interest rate for 60 months (5 years). What will your monthly payments be?


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

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

Where:
- $ M $ is the monthly payment
- $ P $ is the principal amount (the loan amount) = $26,000
- $ r $ is the monthly interest rate = annual interest rate / 12 = 0.02 / 12
- $ n $ is the total number of payments = 60 months

Let's calculate the monthly payment:

\[
r = \frac{0.02}{12} = 0.001667
\]
\[
n = 60 \text{ months}
\]
\[
M = \frac{26000 \times 0.001667 \times (1 + 0.001667)^{60}}{(1 + 0.001667)^{60} - 1}
\]

Now, I'll calculate this for you.Your monthly payment for the car loan will be approximately **$455.72**.

Would you like more details or have any questions? Here are some related questions you might find interesting:

1. How much total interest will you pay over the life of the loan?
2. What would the monthly payment be if the interest rate were 3% instead of 2%?
3. How would the monthly payment change if the loan term were reduced to 48 months?
4. What is the difference in total cost between a 2% and a 5% interest rate over 60 months?
5. How much would you need to pay monthly to pay off the loan in 3 years instead of 5?

**Tip:** When taking out a loan, always consider the total interest paid over the loan term, not just the monthly payments.

You want to buy a $26,000 car. The company is offering a 2% interest rate for 60 months (5 years). What will your monthly payments be?

Find out how to calculate the monthly payments on a $26,000 car loan with a 2% interest rate over 60 months (5 years). This problem involves algebraic concepts such as loan amortization and interest calculation. Suitable for students in Grades 10-12.

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