Math in the Workplace - Numbers & Operations
IDAHO INDEPENDENT BANK
Financial Services
Teller
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Job Description: Help customers cash checks, make deposits, balance different accounts and ledgers. |
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Problem:
A buyer wants to buy a used car at a cost of $10,000.00 financed for 5 years or 60 months. The buyer would like to know the savings on the finance charge if he puts 10% down vs. 20% down against the loan at the time it is taken out.
Assumptions:
The 60 monthly payments are:
| a. |
with 0% down: |
$207.55 |
| b. |
with 10% down: |
$186.80 |
| c. |
with 20% down: |
$166.04 |
 IDAHO INDEPENDENT BANK
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Solution:
Original
Loan Amount |
%
Down |
Payment x Months = Total |
Total
Loan Amount |
Finance
Charge |
| $10,000.00 |
0 % |
$207.55 x 60 = $12,453.00 |
$12,453.00 |
$2,453.00 |
| $9,000.00 |
10% |
$186.00 x 60 = $11,208.00 |
$11,208.00 |
$2,208.00 |
| $8,000.00 |
20% |
$166.04 x 60 = $ 9,962.40 |
$9,962.40 |
$1,962.40 |
1. By putting 10% down at the time the loan is taken out, the buyer saves:
$2,453.00 - $2,208.00 = $245.00
2. By putting 20% down at the time the loan is taken out, the buyer saves:
$2,453.00 - $1,962.40 = $490.60