Introduction to Loans

APR

• The interest rate paid per year or charged per year.

• The last monthly payment on some loans that is much

  
  

  greater than the previous payments.

• Security, such as a personal belonging, car or boat title, CD,

  
  

  or stock certificates, that insures a loan will be paid.

• A person that signs a promissory note along with the

  borrower and agrees to pay back the loan if the borrower

  does not.

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CCSS.HSF-IF.C.8B

Lending Institutions

• Organizations that extend loans; they make their profit by

  charging interest; lending institutions include banks, savings

  and loans, credit unions, consumer finance companies, life

  insurance companies, and pawnshops.

• A type of insurance that pays a specified amount upon the

  policy holder's death; a creditor often requires a borrower to

  take out life insurance to cover the loan in the event the

  borrower dies before the loan is paid.

• An amount borrowers pay as a fee if they wish to pay back an

  entire loan before the due date.

• An agreement that allows the borrower to make payments

  before the due date to reduce the amount of interest.

principal

• The balance, or amount of money, in an account, or amount

  
  

  borrowed.

• An agreement which states the conditions of a loan; a

  borrower's signature confirms a promise to pay back the loan

  as outlined in the agreement.

• A voluntary deduction from an employee's paycheck, used to

  pay off debts.

• An involuntary form of wage assignment, often done by court

  order.

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CCSS.5.NBT.A.2

promissory note

• The balance, or amount of money, in an account, or amount

  
  

  borrowed.

• An agreement which states the conditions of a loan; a

  borrower's signature confirms a promise to pay back the loan

  as outlined in the agreement.

• A voluntary deduction from an employee's paycheck, used to

  pay off debts.

• An involuntary form of wage assignment, often done by court

  order.

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CCSS.RI.6.3

CCSS.RI.6.5

CCSS.RI.7.5

CCSS.RI.8.5

CCSS.RI.9-10.5

Cost of borrowing money on an annual basis; takes into account the interest rate and other related fees on a loan. (The extra money you pay for taking out a loan

• Annual Percentage Rate

• Interest Payment

Person that agrees to repay the debt if the borrower doesn't pay is a

• Debtor

• Cosigner

Tangible asset that is used to secure a loan. (Something valuable to you that you can trade for a loan until the loan is paid back.)

• Values

• Collateral

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CCSS.RI.7.2

CCSS.RI.8.2

CCSS.RL.11-12.2

CCSS.RL.6.1

CCSS.RL.9-10.2

Which of the following is the best example of a personal loan?

• Money borrowed when financing a new or used car and paid back in monthly payments.
• Your parents paying for your college tuition.  
• Taking money out of your savings account to buy something special for yourself with the intent on paying it back as soon as you can to your savings account.
• Asking a friend to borrow $5 for lunch next week.

The terms of a loan are always consistent for the length of the loan.

• True
• False

Interest can be defined as:

• a charge for lending money

• the amount owed for borrowing money

• the amount added into your savings account when opening a bank account

• a charge for convenience of accessing money in your bank

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CCSS.7.RP.A.3