To determine how much interest the borrower will pay over the life of Loan 2, we'll follow these steps:
1. Identify the principal amount (initial loan amount): The principal amount for Loan 2 is \[tex]$5800.00.
2. Identify the monthly payment: The monthly payment for Loan 2 is \$[/tex]183.00.
3. Identify the duration of the loan: The loan duration for Loan 2 is 36 months.
4. Calculate the total payment amount made over the life of the loan: This is done by multiplying the monthly payment by the number of months.
[tex]\[
\text{Total Payment} = \text{Monthly Payment} \times \text{Duration}
\][/tex]
Substituting the values:
[tex]\[
\text{Total Payment} = 183.00 \times 36
\][/tex]
The total payment over 36 months is \[tex]$6588.00.
5. Calculate the total interest paid: This is done by subtracting the principal amount from the total payment amount.
\[
\text{Interest Paid} = \text{Total Payment} - \text{Principal}
\]
Substituting the values:
\[
\text{Interest Paid} = 6588.00 - 5800.00
\]
The total interest paid over the life of the loan is \$[/tex]788.00.
Therefore, the borrower will pay \$788.00 in interest over the life of Loan 2.
