How Long Will It Take to Pay Off a $4,000 Loan with Low Monthly Payments?

What is the time required to pay off a $4,000 loan with low monthly payments?

The company is offering to loan you $4,000 with low monthly payments of $85 per month. The interest rate on the loan is an APR of 15.2 percent compounded monthly. How long will it take for you to pay off the loan?

Answer:

It will take approximately 4.2952 years to pay off the $4,000 loan with low monthly payments.

Are you excited to know how long it will take to pay off your loan? Well, with the information provided, we can calculate the time required to repay the $4,000 loan from Friendly Loans.

The formula used to find the time required to pay off a loan is: A = P(1 + r/n)^(nt), where A is the amount to be repaid, P is the principal, r is the annual interest rate, n is the number of times the interest is compounded per year, and t is the time in years.

First, calculate the total amount to be repaid:

A = P(1 + r/n)^(nt)

A = 4000(1 + 0.152/12)^(12t)

A = 4000(1.0127)^(12t)

Since the monthly payment is $85, in one year, you will pay $85 x 12 = $1,020. The total amount paid after t years is 1020t.

Equating the total amount paid to the total amount to be repaid, we get: 1020t = 4000(1.0127)^(12t)

To solve for t, we can use logarithms to isolate t:

1020t = 4000(1.0127)^(12t)

t = log(4000/1020) / log(1.0127)^12

t ≈ 4.2952 years

Therefore, it will take approximately 4.2952 years to pay off the $4,000 loan with low monthly payments. Now you can plan your budget accordingly and enjoy the financial freedom once the loan is paid off!