Question 3 Mark this question You want to buy a new car. The bank offers you a loan for \( \$ 30,000 \) at a \( 3 \% \) interest rate. You are willing to pay \( \$ 4,500 \) in interest over the life of the loan. Using a simple interest calculation, how many years must you pay off the loan to meet your goal? 3 years 7 years 6 years 5 years SAVE \& CONTINUE

To determine how many years it will take to pay off the loan with simple interest, we can use the formula for simple interest: \[ I = P \times r \times t \] Where \( I \) is the interest, \( P \) is the principal (loan amount), \( r \) is the rate, and \( t \) is the time in years. Plugging in your numbers (\( I = 4,500 \), \( P = 30,000 \), \( r = 0.03 \)), we can rearrange the formula to solve for \( t \): \[ t = \frac{I}{P \times r} = \frac{4,500}{30,000 \times 0.03} = 5 \] So, you must pay off the loan in 5 years to meet your goal! Thinking about car loans historically, they’ve come a long way since the early 20th century when Henry Ford introduced the Model T. Back then, buying a car involved saving up for years or relying on dealers to extend credit, which often came with hefty interest rates! Nowadays, financing options are much more consumer-friendly, with various loans and interest rates available at your fingertips. If you're diving into car buying, remember to budget not just for the loan payments but also for maintenance, insurance, and fuel costs. A common mistake is underestimating these additional expenses, which can add up quickly and leave you financially stretched. Make sure to have a comprehensive financial plan before making that purchase!