To determine how much money a borrower using Loan 1 will pay in interest over the life of the loan, we need to follow these steps:
1. Identify the Principal Amount: This is the initial amount borrowed. For Loan 1, the principal amount is \[tex]$5000.00.
2. Identify the Monthly Payment: This is the amount paid by the borrower each month. For Loan 1, the borrower pays \$[/tex]148.00 each month.
3. Identify the Duration of the Loan: This is the number of months over which the loan will be repaid. For Loan 1, the duration is 36 months.
4. Calculate the Total Payment Over the Duration of the Loan:
[tex]\[
\text{Total Payment} = \text{Monthly Payment} \times \text{Duration}
\][/tex]
Substituting the known values:
[tex]\[
\text{Total Payment} = 148.00 \, \text{dollars/month} \times 36 \, \text{months} = 5328.00 \, \text{dollars}
\][/tex]
5. Calculate the Total Interest Paid: The total interest paid is the difference between the total payment over the life of the loan and the principal amount borrowed:
[tex]\[
\text{Total Interest Paid} = \text{Total Payment} - \text{Principal}
\][/tex]
Substituting the known values:
[tex]\[
\text{Total Interest Paid} = 5328.00 \, \text{dollars} - 5000.00 \, \text{dollars} = 328.00 \, \text{dollars}
\][/tex]
Thus, the borrower using Loan 1 will pay \$328.00 in interest over the life of the loan.
