1. Fixed Term Loans
Buying a Car

2. Amortization – The process of calculating a loan so that all payments are the same
In Microsoft Excel use the payment function to determine the payments on a fixed term loan with a fixed interest rate.
=PMT (interest rate, # of periods, amt borrowed)

3. Terms of the loan
Annual percentage rate – APR
Length of the loan - # of years or months
Any additional fees or charges
Total cost of credit

4. Major factors considered to qualify for a loan
Collateral – what assets are going to be pledged as security?
Capacity – what income is to be used to repay the loan?
Character – includes things like past credit history, legal problems, etc.
Cosigner – requiring a third party to “guarantee” repayment