Visit a site such as Bankrate’s to determine current rates for both a 60-month and a 36-month loan on a new car where the buyer must finance $20,000. Using the loan calculator, what is the difference in monthly payments between the 60-month loan and the 3

Based on Bankrate's website, the current rate for a 60-month loan on a new car with a financed amount of $20,000 is 2.89% and the monthly payment would be $356.13. The current rate for a 36-month loan on a new car with a financed amount of $20,000 is 2.29% with a monthly payment of $574.31. The difference in monthly payments between the 60-month loan and the 36-month loan is $218.18. Looking at the amortization tables, the total interest paid over the life of the 60-month loan would be $1,367.27, while the total interest paid over the life of the 36-month loan would be $783.33. This means that the difference in total interest paid between the two loans is $583.94. These differences show that while the 60-month loan has a lower monthly payment, it will ultimately end up costing the buyer more in terms of total interest paid. The 36-month loan may have a higher monthly payment, but it will save the buyer money in the long run. Therefore, it is important to consider the total cost of the loan rather than just the monthly payment when financing a new car.