Suppose you negotiate a selling price of $25,995 for a Ford Explorer. You make a down payment of 10% of the selling price and finance the remaining balance for 3 years at an annual interest rate of 8.3%. The sales tax is 8.3% of the selling price, and the license fee is 0.7% of the selling price. Find the monthly payment.

We will calculate the monthly payment for the Ford Explorer using the following steps:

### Step 1: Calculate the down payment
The down payment is 10% of the selling price.

\[
\text{Down Payment} = 0.10 \times 25,995 = 2,599.50
\]

### Step 2: Calculate the sales tax and license fee
- Sales tax: $8.3\%$ of the selling price
\[
\text{Sales Tax} = 0.083 \times 25,995 = 2,157.64
\]
- License fee: $0.7\%$ of the selling price
\[
\text{License Fee} = 0.007 \times 25,995 = 181.97
\]

### Step 3: Calculate the total cost of the car
The total cost includes the selling price, sales tax, and license fee:

\[
\text{Total Cost} = 25,995 + 2,157.64 + 181.97 = 28,334.61
\]

### Step 4: Calculate the financed amount
After making the down payment, the remaining amount is what will be financed:

\[
\text{Financed Amount} = \text{Total Cost} - \text{Down Payment} = 28,334.61 - 2,599.50 = 25,735.11
\]

### Step 5: Calculate the monthly payment
To find the monthly payment, we'll use the formula for the monthly payment on a loan:

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

Where:
- $ M $ is the monthly payment,
- $ P $ is the loan amount ($ 25,735.11 $),
- $ r $ is the monthly interest rate (annual interest rate of $ 8.3\% $ divided by 12 months, so $ r = \frac{8.3\%}{12} = 0.00691667 $),
- $ n $ is the total number of payments (3 years $\times$ 12 months = 36 months).

Now, I will calculate this for you.The monthly payment for the Ford Explorer would be approximately **$810.01**.

Do you want further details or have any questions?

Here are 5 related questions to explore:
1. How would the monthly payment change if the interest rate were lower?
2. What would happen if you financed the car over 5 years instead of 3 years?
3. How much would you end up paying in total by the end of the loan period?
4. What portion of the monthly payment goes toward interest vs principal in the first month?
5. How would the payment be affected by a larger down payment?

**Tip:** Increasing the down payment reduces the financed amount and thus the total interest paid.

Learn how to calculate the monthly payment for a Ford Explorer priced at $25,995, with a 10% down payment, financed over 3 years at an annual interest rate of 8.3%. This guide explains how to factor in sales tax and license fees, providing a detailed breakdown of the steps and formulas.

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