Allocation of Installment Loans

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Presentation transcript:

Allocation of Installment Loans Lesson 5.3

Simple Interest Installment Loans

For a Simple interest installment loans a finance charge will be added on to the loan for the use of the money. The annual percentage rate (APR) is the relative costs of borrowing money. We will be using a table to use the APR.

Formulas… Monthly payment for a $100 Loan Monthly Payment Amount = * $100 Total Amount Repaid Number of Payments Monthly Payments = * Total Amount Repaid Finance Charge Amount Financed = -

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Stan was purchasing a washer and dryer with an installment loan that has an APR of 12%. The washer and dryer sells for $1,599.99. The store requires a 10% down payment and 12 monthly payments. Find the finance charge.

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Dr. Best got a loan for $2,500. 00 at 8% for 6 months Dr. Best got a loan for $2,500.00 at 8% for 6 months. Fill in the repayment schedule. Repayment Schedule Payment Number Monthly Payment Amount for Interest Amount for Principal Balance 1 2 3 4 5 6 $2,500 $427.75 $18.75 $409.00 $2091.00 $427.75 $15.68 $412.07 $1678.93 $427.75 $12.59 $415.16 $1263.77 $427.75 $9.48 $418.27 $845.50 $427.75 $6.34 $421.41 $424.09 $427.75 $3.18 $424.57 -$0.48 Final payment; $427.27

Lesson 5.3: Allocation of Installment Loans Questions? Summarize your notes Homework Worksheet