How much would Jose's monthly loan payment be on a $4,500 car loan with a 3-year term at an 8% APR?

To determine Jose's monthly loan payment on a $4,500 car loan with a 3-year term at an 8% APR, we can use the formula for calculating monthly payments on an installment loan, which is based on the principal amount, the interest rate, and the number of payments.

The formula for monthly payments ( M ) is:

[

M = P \frac{r(1 + r)^n}{(1 + r)^n - 1}

]

Where:

• ( P ) is the loan principal (amount borrowed),

• ( r ) is the monthly interest rate (annual rate divided by 12),

• ( n ) is the number of payments (loan term in months).

In this case:

• The principal ( P = 4500 ),

• The annual interest rate is 8%, so the monthly interest rate ( r = \frac{0.08}{12} = \frac{0.08}{12} \approx 0.00667 ),

• The loan term is 3 years, which translates to ( n = 3 \times 12 = 36 ) months.

Plugging these values into the formula:

[

M = 450