To determine how much money a borrower will pay in interest for Loan 1 over the life of the loan, we will follow these steps:
1. Identify the principal amount (the initial amount borrowed):
The principal amount for Loan 1 is [tex]$5000.00.
2. Identify the monthly payment amount:
The monthly payment for Loan 1 is $[/tex]148.00.
3. Identify the duration of the loan in months:
The duration of Loan 1 is 36 months.
4. Calculate the total amount paid over the life of the loan:
To find the total amount paid, we will multiply the monthly payment by the number of payments (duration in months).
Total amount paid = Monthly payment × Duration
[tex]\[
\text{Total amount paid} = 148.00 \, \text{\$} \times 36 \, \text{months} = 5328.00 \, \text{\$}
\][/tex]
5. Calculate the total interest paid:
The total interest paid is the difference between the total amount paid over the life of the loan and the principal amount borrowed.
Total interest paid = Total amount paid - Principal
[tex]\[
\text{Total interest paid} = 5328.00 \, \text{\$} - 5000.00 \, \text{\$} = 328.00 \, \text{\$}
\][/tex]
Hence, the borrower will pay $328.00 in interest over the life of Loan 1.
