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How much money will a borrower using Loan 2 pay in interest over the life of the loan?
To find out how much money a borrower using Loan 2 will pay in interest over the life of the loan, we need to follow these steps:
1. Identify the Principal Amount: - For Loan 2, the principal amount is [tex]$2500.00.
2. Identify the Monthly Payment:
- For Loan 2, the monthly payment is $[/tex]80.00.
3. Identify the Duration of the Loan: - For Loan 2, the duration is 36 months.
4. Calculate the Total Amount Paid: - The total amount paid over the life of the loan is calculated by multiplying the monthly payment by the duration of the loan. - Total Amount Paid = Monthly Payment × Duration - Total Amount Paid = [tex]$80.00 × 36
- Total Amount Paid = $[/tex]2880.00
5. Calculate the Interest Paid: - The interest paid over the life of the loan is found by subtracting the principal amount from the total amount paid. - Interest Paid = Total Amount Paid - Principal - Interest Paid = [tex]$2880.00 - $[/tex]2500.00 - Interest Paid = [tex]$380.00
Therefore, the borrower using Loan 2 will pay $[/tex]380.00 in interest over the life of the loan.
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