# 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.

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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!)

Assignment: Workbook P.53 #1-4

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)

Assignment: Workbook P.53 #5-7

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.

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.

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

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

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 = \$

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

Assignment: Workbook Page 54, #1-3

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 \$\$)

Assignment: Workbook p.54, # 4 & 5

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

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

Assignment: Workbook Page 55, #1-3

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

Assignment: Workbook, Page 55 # 4 & 5

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%

Assignment Workbook, Page 56, #1-3