Finance Questions

Archive for March, 2007

Question: What is the formula for calculating the monthly payment for an Auto Loan?

The bank is financing my wife for 9606.00 at an interest rate of 7.5%. The Term is for 5 yrs (60 months) What should the monthly payments be?

I used to be able to do this, but I think I’m missing something.

Here is how I did my math:

I took $9606.00 and multiplied it times 7.5% and came up with $720.45. Then I added that $720.45 to the $9606.00 and came up with a total of $10,326.45. I then divided the $10,326.45 by 60 (months) and came up with a total of $172.10. Meaning that $172.10 would be my monthly payment.

I went to bankrate.com and used their auto loan calculator and they came up with $192.48

The bank came up with $205.00 (I think they added credit, life, and disability)

So what the HECK am I missing……Please help!

Answer: $192.48 is the correct payment.
Using the formula below –
P = principal = 9606.00
I = annual interest rate = 0.075
L = 5 years
Then:
J = monthly interest = 0.075/12 = 0.00625
N = number of months financed = 12 * 5 = 60
Plug all these values into the formula below and you will get the monthly payment. Any insurance, etc. will be added to this amount.

FYI — How you were figuring the amount is incorrect on a couple of points. First, you only calculated interest for 1 year ($720.45) For 5 years, interest would be more like $3600! However, you don’t owe that much interest over the life of the loan, because you keep making payments. Each payment reduces the amount you owe, thus reducing the interest burden on the outstanding principal.

Although the payment amount doesn’t change over the life of the loan, how it gets divided up does. Early on, most of your payment goes to interest, while toward the end of the 5 years, most of your payment applies toward principal.

good luck!

Auto Loan Calculator

Question: Will you help answering my Personal Finance class question?

My teacher was discussing with my class about how the stock markets have dropped tremendously and wanted us to figure out what our country could enter if it continues. She also informed us that it had happened in the 1970’s. And its not depression. Is it resession?? Thank you so much!

Answer: And see if your teacher has heard this one…

Q: What is the difference between a recession and a depression?

A: A recession is when your neighbor is out of work. A depression is when you are out of work!

Hon. Saleh answers questions on Bonna Bagagawale

Question: For the financially responsible?

What is a reasonable amount of time to pay off a $3500 credit card debt?

It is the only credit card debt we have. We have two car payments, mortgage and one loan payment plus our household finances and an 18 month old daughter to provide for. We have a monthly disposable income of anywhere from $500-$1200. Taking into account the holidays coming, we buy all gifts with cash, how much time should we give ourselves to pay off this credit card?
rate is 9%
PS we’ve budgeted $300 for gifts and the disposable income is AFTER we save and pay bills. It is truly disposable.

Answer: You have to think about where your disposable income could be spent best. If you bite the bullet and cut back on a few of the extras like eating out, Starbucks, and entertainment you should be able to knock that credit card debt out within 3 months.
The next step is to make sure you don’t get yourself back in the same situation. Remember, credit cards are great for emergencies and unexpected large one time expenses that can’t be avoided, but should never be used to live outside of your means.

casa GURU TV – Homeowner options for Household Finance

There is income tax for children. Children with income may need to file income tax. Calculating income tax for children is different from calculating income tax for adults and parents. When filing income tax for children, child tax rates apply for income under a certain amount specified by the IRS. Above that threshold, income tax for children is charged at their parents’ tax level. The same income tax rule for children apply when the children are 14 or under.

IRS tax publication 929 outlines tax rules for dependents including income tax for children.

• Kiddie Tax
• Kiddie Tax Reporting
• Dependent Child’s Income Tax
• Dependent Child Tax
• Taxes on Child’s Capital Loss
• UGMA UTMA
• How are UGMA Account Withdrawals Taxed?

Question: Why is my first car finance repayment more?

I recently bought a car on finance. The first and last finance repayment are much more then the agreed monthly fee. This is my first financial ‘loan’
Is this normal or are they screwing more money from me?

Answer: yes its normal fee because of documentation but i have some excellent material if u want to know n future if u want to buy a car then you will be convenient .if u want to know about all then you should visit this web sight businesstitle.blogspot.com

HD 0% Finance by GZA with Car slide show + Lyrics