Geraldo Echevaria is planning to buy a used Cessna Skyhawk from an aircraft broker.
The listed price is $165,000. Geraldo can get a secured loan from his bank at 7.25% for as long as 60 months, if he pays 15% down. Geraldo’s goal is to keep his payments below $3,800 per month and amortize the loan in 42 months.
a. Can he pay off the loan in 42 months and keep his payments under $3,800?
b. What are Geraldo’s options to get his payments closer to his goal?
c. Geraldo spoke with his bank’s loan officer, who has agreed to finance the deal with a
6.95% loan if he can pay 20% down. Will these conditions meet Geraldo’s goal?
d. Geraldo has told the seller he cannot buy the airplane at the listed price. If the seller agrees to reduce the listed price by $4,600, and Geraldo pays the 20% down, will he meet his goal?