You Are in the Process of Purchasing a New Automobile

question 53

Essay

You are in the process of purchasing a new automobile that will cost you $25,000.The dealership is offering you either a $1000 rebate (applied toward the purchase price)or 3.9% financing for 60 months (with payments made at the end of the month).You have been pre-approved for an auto loan through your local credit union at an interest rate of 7.5% for 60 months.Should you take the $1000 rebate and finance through your credit union or forgo the rebate and finance through the dealership at the lower 3.9% APR?

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Definitions:

Money Supply

The grand total of money available in an economy at a specific time, encompassing cash, coins, and deposits in checking and savings accounts.

Domestic Goods

Goods that are produced within a country's borders and are part of its national output.

Foreign Currency

Money or legal tender issued by a country other than one's own, used for international trade and investment.

Price Levels

A mean calculation of prices for all goods and services currently in the economic domain.