Short Answer 
The loan is a financial agreement where the borrower repays the principal amount plus interest, usually through monthly payments. For a loan with a monthly payment of $84.34 over 36 months, the total payments amount to $3,036.24, resulting in a total interest paid of $476.24 after deducting the principal of $2,560.
Step 1: Understand the Loan Basics
A loan is a financial agreement where one party lends money to another, creating a debt that must be repaid. The borrower typically pays back the loan amount, known as the principal, along with additional charges known as interest. Key aspects to grasp include:
- The sum borrowed is referred to as the principal.
- Interest is the cost of borrowing, calculated based on the loan agreement.
- Payments are often made monthly and may include both principal and interest components.
Step 2: Calculate Total Payments and Interest
To find out the total payments made over the loan duration, multiply the fixed monthly payment by the total number of months of repayment. In this case, if the monthly payment is $84.34 for 36 months, the calculation would be:
- Total Payments = $84.34 x 36 months = $3,036.24
- This includes basic interest payments alongside the principal amount.
- The total interest paid can then be derived by subtracting the original loan amount from this total payment.
Step 3: Conclusion – Calculate Total Interest Paid
After calculating the total payments, the next step is to find out how much interest was paid over the life of the loan. For this loan, the calculations yield:
- Interest Paid = Total Payments – Principal Amount
- Interest Paid = $3,036.24 – $2,560 = $476.24
- This means the total interest paid on the loan amounts to $476.24, confirming the financial burden faced by the borrower.