The interest rate varies from a bank to another depending on the loan period.
When you are using credit facilities from a certain bank, the insurance will be automatically added to the monthly payment.
The monthly payment is a certain amount of money paid on monthly basis to the bank during the loan period that might vary from a year to six.
The interest rate depends on each bank’s term and condition; if the plan was 4.5% flat, then the rate will remain the same for the loan period. If it is ascendant, then it will increase year by year, as a result, it will be 4.5% for the first year, 5% for the second, etc... ( depending on each bank’s conditions)
A down payment is a certain amount of cash deposited when the car it bought depending on the rate that the banks set. Some banks have 0% down payment, some varies from 10% to 30% depending on each bank's conditions.
The insurance conditions vary between different companies that the bank might be dealing with; for example, it can have: -No depreciation on spare parts -Zero franchise -Hold up coverage -Theft and fire coverage -Car repair at RYMCO service centers.
Each bank has a minimum down payment that you should follow in case you want to use its program; in case the down payment exceeds the one that the bank has already set, therefore you might benefit from a lower interest rate.
When you pay immediately for the car, you will have to insure it by yourself or use our insurance plan that is 3.9% of the price of the car for 2 years. This insurance endorses: -No depreciation on spare parts -Zero franchise -Hold up coverage -Theft and fire coverage -Car repair at RYMCO service centers.
Having the price of the car and the interest rate and insurance rate, we can calculate the monthly payment as follows:
RYMCO Vehicle:A $20,000
Bank X rate: 4.5% ( per year)
Insurance rate: 10% ( on 5 years)
Loan period: 5 years or 60 months (Meaning 60 payments)
Down payment: 20%
Down payment = car price x Down payment rate
= $20,000x 20%
Interest costA A A = total price x insurance rate
=$20,000 x 10%
Cash to finance = car price – down payment
= $20,000- $4000
= $ 16,000
Total to finance = Cash to finance + Interest cost
= $ 16,000 + $2,000
Interest amount over 5 years =Total to finance x interest rate x 5 years
= $ 18,000 x 4.5% x 5
Monthly payment = total to finance + interest amount over 5 years / 60 payments (60 months)
A A A A A A A A A =($18,000 + $4,050) /60
A A A A A A A A A =$ 367.5
Therefore, we will have the following:
Car price : $20,000
Down payment: $4,000
Loan period: 60 months
Insurance amount: $ 2,000
Monthly payment: $ 367.5