From Get Engaged! Part 1, if you thought that the monthly payment is the most important factor for Juan to consider, then you are correct. He should still consider the amount of interest that he will be paying, but if he can only pay a certain amount each month, he is not able to pick a payment plan based only on interest. How can Juan compare the amount of interest of the two plans he has been presented with? Juan will need to multiply … .

Great work! In order to find out how much Juan will pay in interst for each plan (3 years versus 5 years), we have to start by finding out how many months are in 3 years and 5 years. Since there are 12 months in one year, you can multiply 12 x 3 and 12 x 5.

PLAN 1: In the first plan, Juan pays $456 for 36 months. 456 x 36 = $16,416. The cost of the car is $15,000. In order to find the interest, we have to find the difference between the total amount that Juan would pay and the cost of the car: 16,416 - 15,000 = $1,416 in interest.

PLAN 2: In the second plan, Juan pays $289 for 60 months. 289 x 60 = $17,340. The cost of the car is $15,000. In order to find the interest, we have to find the difference between the total amount that Juan would pay and the cost of the car: 17,340 - 15,000 = $2,340 in interest.1) What is the benefit to paying a higher monthly payment for less time?

1) What is the benefit to paying a higher monthly payment for less time?

2) What is the benefit to paying a lower monthly payment for longer?