Monthly loan payments Tim Smith is shopping for a used luxury car. He has found one priced at $30,000. The dealer has told Tim that if he can come up with a down payment of $5,000, the dealer will finance the balance of the price at a 6% annual rate over 3 years (36 months).

a. Assuming that Tim accepts the dealer’s offer, what will his monthly (end-of month) payment amount be?

b. Use a financial calculator or spreadsheet to help you figure out what Tim’s monthly payment would be if the dealer were willing to finance the balance of the car price at a 4% annual rate.

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