Question 1

Price = $23500

Sales tax = 7%

Down payment = $1200

Financing period = 48 months

Payment per month = $551.44

1. Amount financed = loan amount – prepaid cash

$23500 – $1200 = $22300

Amount financed represents the loan amount having after Lessing any prepaid cash.

1. Installment price

$551.44 * 48 = 26469.12

Installment price is the full amount that is paid over the finance period.

1. Full finance charges

26469.12 – $22300 = $4169.12

The finance charge is the cost incurred at the end of the financing period.

Question 2

The core advantage of paying in cash for a car is that one gets to avoid incurring financing charges which bloat the budget. When a buyer pays in cash, he or she bears only the price and other applicable fees for owning a car. On the other hand, the advantage of financing a vehicle is that it gives car buyers who do not have enough money an opportunity to own a car and later pay the outstanding amount over a specified period.

Question 3

When a person has a good credit score, he or she enjoys the privilege of accessing loans at low interest from financial institutions. Additionally, the loans are approved quick and easy. On the other hand, persons that have a poor credit score are assumed irresponsible, and they lack financial discipline. Therefore, they are punished with high interest rates on loans. Persons with low credit score also face the challenge of accessing credit facilities which are enjoyed by creditworthy people.  I have a low credit score, but over time I have been working hard to raise it.

 
Do you need high quality Custom Essay Writing Services?