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Can someone explain intrest to me?

I dont understand it. I ve just read a paragraph on economics and i should be able to answer this question. Advertisment info says, 0.0% APR or 2,500 cash back'



1. In an advertisment above, about how much does the car dealer or manufacturer think giving 0.0% on selected models will cost per year?



a)1,000

b 1,500

c) 2,000

d)2,500

0r

e) 3,000



I have NO idea!

Answer Question
 
aMbeR012005

Asked by aMbeR012005 at 5:43 PM on May. 7, 2009 in Money & Work

Level 1 (3 Credits)
Answers (11)
  • anyone? Please!!!
    aMbeR012005

    Answer by aMbeR012005 at 5:45 PM on May. 7, 2009

  • 0 percent means your paying nothing on the interest only one the loan amount. If you don't qualify for 0% then you get 2,500 cash back to make up for some of the interest you will be paying which is usually equal to 1 year. Its just an incentive to get you to buy a car.
    brailynsmama08

    Answer by brailynsmama08 at 5:47 PM on May. 7, 2009

  • Seriously, in these uncertain economic times, do not buy a car that you cannot afford. If you don't have the money for a new car, then buy a used car.
    rkoloms

    Answer by rkoloms at 5:49 PM on May. 7, 2009

  • My co worker was explaining this to me. So i get the APR and intrest rates.

    I STILL cant answer the question...anyone?????

    Am i missing something here?
    aMbeR012005

    Answer by aMbeR012005 at 5:58 PM on May. 7, 2009

  • Oh no, i will NOT be buying a car right now lol
    This is a question on my economics homework i cant answer.
    aMbeR012005

    Answer by aMbeR012005 at 5:59 PM on May. 7, 2009

  • APR reflects full cost of car loan whereas interest is just one component of overall cost of car loan. There are many factors that influence the interest rate attached with car loan and these must be properly understood by a person for getting low interest rate car loans.

    brailynsmama08

    Answer by brailynsmama08 at 6:07 PM on May. 7, 2009

  • $2,500. Or less.... but probably $2,500. That's why they give you the option of taking $2,500 cash or having 0% interest. KWIM?

    Also does it say 0.0% financing for the first year?
    Erica_Smerica

    Answer by Erica_Smerica at 7:37 PM on May. 7, 2009

  • Wouldn't it depend on how much the car cost?
    Anonymous

    Answer by Anonymous at 7:48 PM on May. 7, 2009

  • I am thinking it is not an interest question but that the two offers must be what the dealer thinks are equal in value, so the answer would be $2500, but I don't know if this is correct or not.
    Bmat

    Answer by Bmat at 9:12 PM on May. 7, 2009

  • It just occurred to me. The $2500 would be equal to the 0% over the life of the loan, so you'd have to divide the $2500 by the number of years to find the yearly value of the interest.
    Bmat

    Answer by Bmat at 9:16 PM on May. 7, 2009

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