Loans - 8.1 to 8.3

Front

What is a final payment in the context of a simple interest loan?

Back

The final payment is the payment on a simple interest loan that consists of the remaining balance plus the current month's interest.

Front

What is the finance charge for an installment loan of $1,000 at an 8% APR to be repaid in 18 months?

Back

$63.80

Front

How do you calculate the finance charge for a treadmill purchased with an installment loan at 12% APR?

Back

The finance charge is calculated based on the loan amount, down payment, and the interest rate over the loan term.

Front

What does the term 'term' refer to in loans?

Back

The term is the amount of time for which a loan is granted before it has to be repaid.

Front

How much ordinary interest is owed on a single-payment loan of $5,000 for 90 days at 9% interest?

Back

$112.50

Front

What is an installment loan?

Back

An installment loan is a type of loan that is repaid over time with a set number of scheduled payments.

Front

What is the annual percentage rate (APR)?

Back

The APR is the annual rate charged for borrowing or earned through an investment, expressed as a percentage.

Front

What is a down payment?

Back

A down payment is an upfront payment made when purchasing a big-ticket item, often expressed as a percentage of the total price.

Front

What is the principal in the context of a loan?

Back

The principal is the original sum of money borrowed in a loan, or the amount still owed on which interest is calculated.

Front

How do you determine the total cost of a loan?

Back

The total cost of a loan is determined by adding the principal amount and the finance charges.