Monthly Payments

Front

What is a monthly payment?

Back

A monthly payment is a fixed amount of money that a borrower pays to a lender each month to repay a loan.

Front

How do you calculate total repayment on a loan?

Back

Total repayment is calculated by multiplying the monthly payment by the total number of payments (months) made.

Front

What is interest in the context of loans?

Back

Interest is the cost of borrowing money, usually expressed as a percentage of the loan amount.

Front

What is the formula to calculate interest paid on a loan?

Back

Interest paid = Total repayment - Principal amount.

Front

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

Back

Principal is the original sum of money borrowed or the amount still owed on which interest is calculated.

Front

How do you find the total number of payments for a loan?

Back

Total number of payments = Number of years x 12 (months per year).

Front

What is the significance of the interest rate in loans?

Back

The interest rate determines how much extra money the borrower will pay on top of the principal over the life of the loan.

Front

If a loan has a monthly payment of $200 for 3 years, what is the total repayment?

Back

Total repayment = $200 x (3 years x 12 months) = $7,200.

Front

What is the difference between simple interest and compound interest?

Back

Simple interest is calculated only on the principal amount, while compound interest is calculated on the principal plus any accumulated interest.

Front

How do you calculate the total interest paid on a loan?

Back

Total interest paid = (Monthly payment x Total number of payments) - Principal.