4-2 Loans, Vocabulary

Front

What is Wage Garnishment?

Back

An involuntary form of wage assignment, often done by court order, where a portion of a person's earnings is withheld to pay off a debt.

Front

What amount will Evan be financing if he wants to purchase a used car for $10,800 with a $2,000 down payment?

Back

$8,800

Front

How do you calculate the monthly payment for a loan?

Back

Monthly Payment = (Loan Amount + Interest) / Number of Months.

Front

What is a Prepayment Penalty?

Back

An amount borrowers pay as a fee if they wish to pay back an entire loan before the due date.

Front

If Adam took out a loan of $3,200 at an APR of 15% for 6 months, what is his monthly payment?

Back

$556.80

Front

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

Back

Total Interest = (Loan Amount x APR x Time) / 100.

Front

What does APR stand for?

Back

Annual Percentage Rate, which represents the yearly cost of borrowing expressed as a percentage.

Front

If Maggie is purchasing an $11,000 car with a $1,000 down payment and financing the rest at 4.8% interest for 3 years, what is her monthly payment?

Back

$298.81

Front

What is a Promissory Note?

Back

A legal document in which a borrower agrees to pay back a loan under specified terms.

Front

What is Collateral?

Back

An asset that a borrower offers to a lender to secure a loan.