Financial Maths Grade 10 | Hire Purchase | Introduction #Finance

so this is going to be quite an interesting question jabu would like to purchase a new Golf GTI so it’s a car which is selling for 300 000 Rand the car dealership requires a 20 deposit and will then text-decoration: none;">Finance the car over five years at 13 per annum simple interest jabu will pay off the car monthly so what this means and this is a very real life kind of question um people buying cars so let’s say here’s jabu he’s very happy because he’s gonna go

to the car dealership to buy his new car all right so he walks into the car dealership he spots this lovely car that he’s that he that he really wants but it is quite expensive it’s 300 000 Rand but there is an alternative way for jabu to be able to buy this car without having to pay

the full amount so and this is how it works in real life for 95 of people This Is How They purchase cars so the car dealership wants a 20 deposit so that means that he has to pay them 20 percent of the price of the car which is 300 000 Rand of means um times and so 20 you can say 20 over a hundred

just like we do with our normal um simple interest or compound interest questions so that’s meant to be at times 300 000 rent and what you’ll find is that that is going to give you sixty thousand so jabu is gonna pay the car dealership sixty thousand Rand up front on the day he’s

gonna give them sixty thousand rent the car dealership will then say okay fine you can now have the car but you are going to pay us back the rest of the money and because you’re not paying us the full amount we’re gonna penalize you we’re going to add interest but job was fine

he’s happy he knows he’s going to get a bit of interest and a bit of a penalty but he just wants his car so he’s paid a sixty thousand Rand so how much is still left of the car well there’s still another 240 000 Rand now the car dealership they’re going to look at that

240 000 Rand and they’re gonna say hmm whoa we not very happy so we’re gonna add interest they’re gonna add interest using I think we said simple interest let’s just double check there we go simple interest 13 and it’s going to be for five years so let’s see how

much travel is actually going to have to pay so we just use the simple interest formula using the 240 000 remember they’re not interested in the 300 000 anymore because jabu has already paid some of it so they’re not going to add interest onto the 300 000 they’re going to add

interest or a penalty onto the 240 000. the interest rate we said was 13 which is 0.13 and job was going to have to pay this car over a five-year period now if you go type this all in on your calculator it’s going to give you 396 000 Rand that jabu store owes these people so question number

one asks us how much is jabul gonna pay for this car in total well on the day that he was in the car dealership how much did he pay then he paid sixty thousand then the car dealership says okay we’re gonna take your 240 000 that you store OS and we’re gonna add a bit of penalty onto

that so now you still owe us 396 000 Rand plus he’s already paid the sixty thousand so that’s going to mean that means that Jabo is going to pay a total of 456 000 Rand for this car when it was only worth 300 000 Rand in the first place okay so he’s gonna pay a total of 456 000

Rand what will his monthly payments be well on the day that he walks into the shop he pays them sixty thousand Rand they then take that 240 000 Rand and they they add interest onto it and that gave us a total of three hundred and ninety six thousand that’s how much he still has to pay them

they’re not worried about this sixty thousand that’s already paid so he still owes them three hundred and ninety six thousand Rand now in five years there is 60 months so you can say 396 000 divided by 60 and that’s going to give you 6 600 Rand per month so jabu for the next 60

months he will pay these people 6 600 Rand now you see why some people do this is some people don’t or not many people have 300 000 Rand in their bank account so what they do is they but but many people maybe do have they maybe have sixty thousand rents so they can afford to pay the sixty

thousand and then they have to pay the car dealership on a monthly basis an amount of six thousand six hundred which for most people they can afford that but in the long run you see how drabble is going to end up paying so much more than what he actually has to but at least he can get his car and

then the third question says how much interest does jabu pay in total well interest is like the penalty amount in this scenario so he was meant to pay 300 000 Rand that’s how much the car is worth he pays a total of 456 000 rounds so how much penalty has been applied well the penalty has been

the penalty will be 456 000 minus the 300 000 and that’s going to give you a value of 156 000 Rand