You decide to quit using your credit card and want to pay off the balance of $14,800 in 3 years. Your interest rate is 15.65% compounded monthly.

What will your monthly payments be?

$

How much interest do you pay?

To determine the monthly payments and the total interest paid, we will use the formula for the monthly payment of a loan with compound interest:

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

Where:
- $ M $ is the monthly payment.
- $ P $ is the principal (loan amount), which is $14,800.
- $ r $ is the monthly interest rate (annual interest rate divided by 12).
- $ n $ is the number of months (years × 12).

### Step 1: Calculate the monthly interest rate.
\[
r = \frac{15.65\%}{12} = \frac{0.1565}{12} \approx 0.01304
\]

### Step 2: Calculate the number of months.
\[
n = 3 \, \text{years} \times 12 = 36 \, \text{months}
\]

### Step 3: Calculate the monthly payment $ M $.

Now I will calculate the monthly payment and the total interest paid.The monthly payment will be approximately **$517.77**.

The total interest paid over 3 years will be approximately **$3,839.73**.

Would you like further details on how these values were derived or have any other questions?

Here are 5 related questions to expand on this topic:
1. What happens if the interest rate increases or decreases?
2. How would your payments change if you paid off the loan in 5 years instead?
3. How does compounding monthly differ from compounding annually in terms of payments?
4. What if you make extra payments toward the principal each month?
5. Can making bi-weekly payments instead of monthly reduce interest paid?

**Tip:** Always try to pay more than the minimum monthly payment if possible; this reduces the total interest paid over time.

You decide to quit using your credit card and want to pay off the balance of $14,800 in 3 years. Your interest rate is 15.65% compounded monthly. What will your monthly payments be? How much interest do you pay?

Learn how to calculate the monthly payments and total interest for a $14,800 loan with an interest rate of 15.65% compounded monthly over 3 years. Includes a step-by-step breakdown using the compound interest formula. Suitable for high school students in Grades 10-12.

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