Two years ago, you purchased a $18,000 car, putting $3,500 down and borrowing the rest. your loan was a 48-month fixed rate loan at a stated rate of 7.5% per year. you paid a non-refundable application fee of $100 at that time in cash. interest rates have fallen during the last two years and a new bank now offers to refinance your car by lending you the balance due at a stated rate of 5.0% per year. you will use the proceeds of this loan to pay off the old loan. suppose the new loan over the residual loan life requires a $200 non-refundable application fee. given all this information, should you refinance? how much do you gain/lose if you do?
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Explanation:
Two years ago, you purchased a $18,000 car, putting $3,500 down and borrowing the rest. your loan was a 48-month fixed rate loan at a stated rate of 7.5% per year. you paid a non-refundable application fee of $100 at that time in cash. interest rates have fallen during the last two years and a new bank now offers to refinance your car by lending you the balance due at a stated rate of 5.0% per year. you will use the proceeds of this loan to pay off the old loan. suppose the new loan over the residual loan life requires a $200 non-refundable application fee. given all this information, should you refinance.how much do you gain/lose if you because should you given all this information reference much do you gain bye laws if you because 5.0 % per year you will use the proceeds of this loan to pay off the old loan suppose the lending you are balance due at a started rate application hundred at that time in cash you loan was 48 month