What to Know About a Loan

What to Know About a Loan

by Marcie Borchard

​Check for Understanding: Using the above chart Carolina is borrowing $41,000 for 5 years at an APR of 6.5%. What is her monthly payment?

​What is the monthly payment at 6.5% for 5 years for $1000? use the chart

What about for $41,000?

​$19.57 x 41 = $802.37

The total monthly payments for a 5-year loan is $7,171.20. The APR is 7.25%. How much money was originally borrowed?

​Let's get out those calculators and crunch some numbers to see what you get.

$6000!!!!

​Carl is borrowing x dollars over a 3 year period. The monthly payment is y dollars. Express his finance charge algebraically.

​How many payments will be made in 3 years? 3 x 12 = 36

​

​So how much is Carl paying? 36y

​

​If he borrowed x dollars then the finance charge is his total payments minus the original amount.

​

​36y - x

​Find the monthly payment for a $1000, one-year loan at an APR of 7.5%.

​$86.76

​Did you use the table or the formula?? :)