Audrey is buying a new car for $32,998.00. She plans to make a down payment of $4,200.00. If she's to make monthly payments of $525 for the next five years, what APR has she paid?
There are 5 × 12 = 60 months payment of $525 Total payment at the end of 60 months = 525 × 60 = 31500
APR is an interest rate charged as simple interest.
The interest paid over the five years is 31500 - 28798 = 2702 Then annual interest is 2702÷5 = 540.4 This value as percentage is [540.4÷32998] × 100 = 1.64%
