Based on the simple interest rate on the loan, and the cost of the car that Darren purchased, the monthly payment would be $163.89
How much is the monthly payment?
Darren took a loan to buy a car that cost $10,000 so the loan was the same amount. The amount that Darren would owe after 6 years is:
= Loan amount + ( Loan amount x Simple interest annual rate x Number of years)
= 10,000 + ( 10,000 x 3% x 6)
= 10,000 + 1,800
= $11,800
The amount that Darren would pay as a monthly payment would be:
= Total loan amount / Number of months of loan
= 11,800 / (6 years x 12 months a year)
= 11,800 / 72 months
= $163.89
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