Loan Monthly Payments

Front

What is the formula to calculate total repayment of a loan?

Back

Total Repayment = Monthly Payment x Number of Months

Front

What does APR stand for in loan agreements?

Back

APR stands for Annual Percentage Rate, which represents the yearly interest rate charged on borrowed money.

Front

How does an increase in interest rate affect monthly payments?

Back

An increase in interest rate will cause the monthly payment to go up.

Front

If you finance a $12,000 hot tub with a $5,000 down payment at 9% APR for 24 months, what is the monthly payment?

Back

The monthly payment is $319.90.

Front

What is the total price of a car if you put down 20% on a $7,000 car and pay monthly payments of $109.40 for 60 months?

Back

The total price of the car is $7964.00.

Front

What is the significance of the down payment in a loan?

Back

A down payment reduces the amount of money you need to borrow and can lower your monthly payments.

Front

How do you calculate the monthly payment for a loan?

Back

Monthly Payment = (Loan Amount x Interest Rate) / (1 - (1 + Interest Rate)^-Number of Payments)

Front

What is the impact of loan term length on monthly payments?

Back

A longer loan term generally results in lower monthly payments but higher total interest paid.

Front

What is the difference between fixed and variable interest rates?

Back

Fixed interest rates remain the same throughout the loan term, while variable rates can change based on market conditions.

Front

What is the purpose of calculating total repayment?

Back

Calculating total repayment helps borrowers understand the total cost of the loan over its duration.