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Loans- Chapter 8 Do Now- Jane Dimas obtained a single-payment loan of $420 to pay a repair bill that she did not have the cash for. She agreed to pay back the loan in 90 days at an interest rate of 12.75% exact interest. What is the maturity value of her loan? Exact interest is = 365 days I = P x R x T $420 x x 90/365 =$13.20 interest $420 principal borrowed + $13.20 interest owed =$ maturity value (amount she has to pay back!)

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**Assignment: Workbook P.53 #1-4**

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**Loans- Chapter 8 I = P x R X T $72,000 x .12 x 91/360= $2,184 interest**

Do Now- Anita Sloane’s bank granted her a single-payment loan of $72,000 for 91 days at 12% ordinary interest. What is the maturity value of the loan? Ordinary interest = 360 days I = P x R X T $72,000 x .12 x 91/360= $2,184 interest $72,000 principal + $2,184 interest= $74,184 maturity value (amount that must be paid back in 91 days)

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**Assignment: Workbook P.53 #5-7**

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Loans – Chapter 8 Do Now- What is an installment loan? Can you give any examples? An installment loan is a loan that is paid back in equal installments over a set period of time. People will usually give a down payment up front in order to lower their monthly payments. Home loans, car loans and college loans are popular types of installment loans.

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**Notes: Installment and Simple Interest Loans**

Down Payment- The amount of $$$ you put down at the beginning of the loan to lower your monthly payments. Amount Financed- Price of item you are buying – down payment. Monthly Payment- The amount of the bill you will receive every month. It is fixed, meaning it will not change. Finance Charge- The total amount you repay on the loan – the amount financed.

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Do Now Takesha Quintero is buying a new refrigerator for $1399. She makes a down payment of $199 and financed the rest. How much did she finance? Amount financed =Cash price – Down payment $ $199 = $1200 financed

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Do Now Rebecca Clay purchased a washer and dryer for $1140. She used the store’s installment credit plan to pay for the items. She made a 20% down payment and financed the rest. What amount did she finance? Cash price – down payment $1140 – (1140 x .20) $ $228 = $912 down payment

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Do Now Julio Fernandez purchases a stove with an installment loan that has an APR of 12%. The stove sells for $ The store requires a 10% down payment and 12 monthly payments. What is the finance charge? Step 1: Find the amount financed $ – (.10 x $ ) $ $140 = $

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Step 2: Find the monthly payment Refer to the chart on page 54 for this! (Amount of loan / $100) x monthly payment for a $100 loan ($ /$100) x $8.88 from chart= $ monthly payment Step 3: Find the total amount repaid 12 month of payments x $ monthly payment= $ Step 4: Find the finance charge $ x $ = $82.69 finance charge

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Assignment: Workbook Page 54, #1-3

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**Do Now Turn to workbook p.54, #3 (Do on separate sheet of paper)**

b)Look on the chart 12 months, 10% APR The number you find is 8.79 8.79 x 120 = $ monthly payment c) 12 monthly payments x $ = $12, total amount paid back d) Finance Charge = $12, $12,000 = $ finance charge (the cost of borrowing the $$)

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**Assignment: Workbook p.54, # 4 & 5**

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Loans- Ch. 8 Do Now- Sam Garcia obtained a 12-month loan from her credit union for $1500 at a rate of 12%. Her monthly payment is $ For the first payment: a) What is the interest? $1500 x .12 x 1/12 = $15 interest b) How much is the payment to principal? $ $15 = $ c) What is the new balance? $ $ = $ new balance

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Do Now James Connor took a 24 month loan of $7,000 from his bank at a rate of 8.75%. His first monthly payment is $ For the first payment: a) What is the interest? $7000 x x 1/12 = $51.04 interest b) What is the payment to principal? =$ $51.04 = $ payment to principal c) What is the new balance? =$7,000 - $ = $ new balance

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**Assignment: Workbook Page 55, #1-3**

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**Do Now Turn to your notebook, page 55, #4**

Patricia Nichols took out a $4,000 simple interest loan at 12 % for 12 months. After 5 payments, the balance was $ She pays the loan off when the next payment is due. What is the current month’s interest? $ x .12 x 1/12= $23.92 interest b) What is the final payment? $ $23.92= $ final payment

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**Assignment: Workbook, Page 55 # 4 & 5**

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Do Now Natalie Rubino is planning to borrow $2,800 for a new furnace. Bell Finance will loan her the money for 24 months at a finance charge of $428. What is the APR on this loan? Please turn to page 56 in WB $100 x (finance charge / amount financed) $100 x ($428 / $2800)= $100 x = $15.29 Chart- Go down to 24 months, trace across to # closest to $15.29 and locate the APR on top! APR is 14%

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**Assignment Workbook, Page 56, #1-3**

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**Please turn to page 56, #3 in your notebooks**

Do Now Please turn to page 56, #3 in your notebooks $ $574.54 = $2,000 amount financed $121 monthly payment x 18 months =$2,178 total payments - $2000 financed =$178 finance charge $100 x ($178 / $2000) =8.9 look on chart 18 months, $8.90 = 11% APR

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**Assignment Workbook, Page 56, #4 & 5**

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