You want to buy a $28,000 car. You can make a 10% down payment, and will finance the balance with a 2% interest rate for 48 months (4 years). What will your monthly payments be?

Let's break down the steps to calculate the monthly payments for the car.

### 1. **Calculate the down payment:**
The down payment is 10% of the car's total price.
\[
\text{Down payment} = 0.10 \times 28,000 = 2,800
\]

### 2. **Calculate the amount to be financed:**
The remaining amount to be financed is the total price minus the down payment:
\[
\text{Financed amount} = 28,000 - 2,800 = 25,200
\]

### 3. **Interest rate and loan duration:**
- Interest rate = 2% annually (0.02)
- Loan duration = 48 months (4 years)

### 4. **Monthly interest rate:**
The monthly interest rate is the annual rate divided by 12:
\[
\text{Monthly interest rate} = \frac{0.02}{12} = 0.0016667
\]

### 5. **Formula for monthly payments:**
The monthly payment $ M $ is calculated using the formula for a fixed-rate loan:
\[
M = \frac{P \times r \times (1 + r)^n}{(1 + r)^n - 1}
\]
where:
- $ P $ is the loan amount (25,200),
- $ r $ is the monthly interest rate (0.0016667),
- $ n $ is the number of payments (48 months).

### 6. **Plugging in the values:**
\[
M = \frac{25,200 \times 0.0016667 \times (1 + 0.0016667)^{48}}{(1 + 0.0016667)^{48} - 1}
\]

### 7. **Final calculation:**
Using this formula, the monthly payment comes out to approximately:
\[
M \approx 552.11
\]

So, your monthly payment will be about **$552.11** for 48 months.

Would you like more details on any of the steps? Here are five related questions to consider:

1. What happens if the interest rate increases to 3%?
2. How would a larger down payment affect the monthly payments?
3. Can the loan term be shortened to reduce overall interest?
4. What if you want to pay off the loan early—how does that affect interest?
5. How does compounding interest impact monthly loan payments?

**Tip:** Increasing your down payment reduces the loan amount and can significantly decrease your monthly payments.

Learn how to calculate monthly payments for a $28,000 car with a 10% down payment and 2% interest rate over 48 months. This problem involves key mathematical concepts like interest calculation, loan amortization, and algebra. Detailed step-by-step solution included.

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