Financial Lit - GRIT Loans Review

Financial Lit
GRIT 12/2
Loans Review

What we have learned about so far...

• Credit Basics

• Auto Loans

• Mortgage Loans

Credit Basics

Credit Score

The bank's ability to trust you with money.

Why is Credit Score important?

• It determines whether you will be approved for a loan.

• It determines how much credit you will be trusted with.

• Some jobs or landlords will check your credit score before accepting your application.

Multiple Select

What are the three components of a loan?

• The Principal

• The Interest Rate

• The Loan Term

• Your Credit Score

Categorize

Options (5)

Credit Score

Term Length

Fed Policy

Economy

Secured vs. Unsecured

Interest rates are dependent upon factors that the borrower can and cannot control. Organize these options into the correct category:

Borrower can control:

Borrower cannot control:

Multiple Select

What can affect your monthly loan payments?

• Term Length

• Down Payment

• Interest Rate

• Your Job Experience

Drag and Drop

The ​

Placeholder

your credit score, the ​

Placeholder

your annual percentage rate (APR).

Drag these tiles and drop them in the correct blank above

higher

lower

average

Auto & Mortgage Loans

What is the difference between Annual Percentage Rate (APR) vs. Interest Rate??

Open Ended

Explain the difference between purchasing and leasing a vehicle.

Buying vs. Leasing

​You are interested in a used car, not more than three years old, with under 40,000 miles. You’ve found a two-year-old 4-door sedan for $16,921 at one dealer. Your financial institution has used car loans for qualifying buyers for 36 months at 4.39%. Another dealer is leasing one-year-old 4-door sedans for $2,000 at signing and then $285 a month for 36 months. You have $2,000 saved to apply to a car purchase or lease. Use that to make a down payment.

Compare the costs of financing a car vs. leasing it. What are the total amounts to buy or lease these cars?

https://www.bankrate.com/loans/loan-calculator/

Calculations

Down payment = % * Price of Home / Vehicle​

Loan Amount = Price of Home / Vehicle - Down Payment - Cash Allowance (if applicable)

Multiple Choice

Anthony is interested in purchasing a home valued at $123,000. He is planning on putting 10% down. How much will his down payment be?

• $10,000
• $15,000
• $20,000
• $12,300

Multiple Choice

Anthony is interested in purchasing a home valued at $123,000. He is planning on putting 10% down. How much will his loan amount be?

• $120,000
• $112,000
• $115,500
• $110,700

Multiple Choice

Holly wants to buy a 2022 Ford Explorer from Davis Ford. Davis Ford has it priced at $50,000. If Holly makes a 5% down payment and receives a $1,500 cash allowance, what will her loan amount be?

• $45,000
• $46,000

• $55,000
• $48,500

Multiple Choice

Abby is interested in purchasing a home valued at $66,000. She is planning on putting 15% down. How much will her down payment be?

• $8,000
• $10,500
• $12,000
• $9,900

Multiple Choice

Abby is interested in purchasing a home valued at $66,000. She is planning on putting 15% down. How much will her loan amount be?

• $60,000
• $56,100
• $55,000
• $50,000

Multiple Choice

Mike wants to buy a 2021 GMC Terrain from Davis Ford. Davis Ford has it priced at $25,000. If Holly makes a 10% down payment and receives a $500 cash allowance, what will her loan amount be?

• $21,000

• $23,000

• $24,000

• $22,000

Private Mortgage Insurance (PMI)

What is it?

PMI is arranged by the lender and provided by private insurance companies. It insures the lender against loss caused by borrowers failing to make loan payments.

Private Mortgage Insurance (PMI)

Factors that Effect PMI

• Credit Score

• Loan to Value

• Type of Loan

• Down Payment