Question
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Gently used - Borrow at interest rate
15. Pick a monthly payment: (must be more than )
How long does it take you to pay off the car?
How much do you end up paying for the car if you just pay the minimum each month?

Ask by Burgess Horton. in the United States
Jan 24,2025

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To pay off a $5,000 loan at a 5% annual interest rate with a monthly payment of at least $50, it will take approximately 10 years and 9.5 months. If you pay $50 each month, you’ll end up paying a total of $6,475, which includes $1,475 in interest.

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To tackle this, let’s first pick a monthly payment amount. If you decide to pay each month, we can calculate how long it will take to pay off the loan of at a annual interest rate. Using the formula for loan amortization, it would take approximately 54 months (or about 4.5 years) to pay it off. In total, you would pay around for the car if you stuck with this monthly payment.
Now, if you opted to just pay the minimum, say per month, it would take much longer to pay off the loan – approximately 123 months (over 10 years!). During that time, the total cost would balloon to about due to accrued interest. So while it may seem manageable to start with lower payments, it significantly hikes up your total!

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