TEST_LOAN AMORTIZATION

Front

What is Amortization?

Back

Amortization is the paying off of debt with a fixed repayment schedule in regular installments over a period of time.

Front

What is the 'principal' in a loan?

Back

The principal is the amount originally borrowed.

Front

Calculate the monthly payment for a $10,000 car loan at 5.9% for 4 years.

Back

The monthly payment would be $234.39.

Front

What is the correct formula for finding the monthly payment on a loan?

Back

Front

What is the term for the installment payment on a loan?

Back

The installment payment on the loan is termed Amortization.

Front

What does a fixed repayment schedule mean?

Back

A fixed repayment schedule means that the payment amount remains the same throughout the loan term.

Front

What is an example of a loan that uses amortization?

Back

Examples include a mortgage or a car loan.

Front

What is the difference between principal and interest?

Back

Principal is the amount borrowed, while interest is the cost of borrowing that amount.

Front

What is the purpose of amortization?

Back

The purpose of amortization is to gradually reduce the debt over time through regular payments.

Front

What happens if you miss a loan payment?

Back

Missing a loan payment can result in late fees, increased interest rates, and damage to your credit score.