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Case Problem Analysis Paper

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Purchasing a car is never an easy decisions but many times a car is a necessity. The scenario presented will be the following. The price of the used car is $20,000. Sales tax on this car is 8.4% of the price of the vehicle. You intend to finance the entire cost of the car and sales tax, less a down payment of $1,500. You intend to finance the car for 48 months and your car payment will be $455.12 per month. The amount financed will be the cash price subtracting the down payment. In this case, the cash price will be $20,000 and the down payment is $1,500. After subtracting these two amounts, I obtained that the amount financed will be $18,500. The installment price of the car will be $23,345.76. This amount is obtained by multiplying the amounts of financing by the monthly rate (48 x $455.12) which will equal $21,845.76 in addition you must add the down payment of $1,500 to get the total value of the car. Finance charges will be the total amount of $23,345.76 minus the cash price of $20,000.00. This will leave a finance charges to equal $3,345.76. …show more content…

You may walk in with one thing in your mind but when you see the option available to you to purchase something else it may become hard to focus on your original task. Considering how many prices have inflated and many times things cost more than we expect it is hard to pay a car in cash up front. It does have its advantages that you will avoid finance fees and interest costs ("Should I Pay Cash, Lease or Finance My New Car? - Cars.com," n.d.). You also walk away debt free but it may take months or years to obtain the amount of money needed to purchase the car. Financing a car is always an easy option. This allows you to pay a fixed rate for a certain amount of time. Financing allows you to build credit as well give you a sense of responsibility. Financing also increase the original price of the car

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