Tess is going to purchase a new car that has a list price of $29,190. She is planning on trading in her good-condition 2006 Dodge Dakota and financing the rest of the cost over four years, paying monthly. Her finance plan has an interest rate of 10.73%, compounded monthly. Tess will also be responsible for 7.14% sales tax, a $1,235 vehicle registration fee, and a $97 documentation fee. If the dealer gives Tess 75% of the listed trade-in price on her car, once the financing is paid off, what percent of the total amount paid will the interest be?

The interest percentage of the total amount to be paid is calculated as the total interest divided by the total loan payment, multiplied by 100.

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The future value of and the interest on the loan to be paid is calculated using an online finance calculator as follows:

Data and Calculations:

Auto Price = $29190

Loan Term = 48 months (12 x 4 years)

Interest Rate = 10.73%

Down Payment = $0

Trade-in Value = $21,893 ($29,190 x 75%)

Sales Tax = 7.14%

Title, Registration, and Other Fees = $1,332 ($1,235 + $97)

Monthly Pay: $187.64

Total Loan Amount = $7,297.00

Sale Tax $521.01

Upfront Payment $1,853.01

Total of 48 Loan Payments = $9,006.72 ($187.64 x 48)

Total Loan Interest = $1,709.69

Total Cost (price, interest, tax, fees) = $32,752.70

Results:

Rate of interest = 18.98% ($1,709.69/$9,006.72 x 100)

Thus, the percent of the total amount to be paid that will be interest is 18.98%.

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