11.4 Review

A fixed installment loan is one where you pay a __________ amount of money for a set number of payments.

Kim is buying a car for 20,000. The car salesman advertises an APR of 6.5% for 36 payments. What is the finance charge? What is the monthly payment?

What is a finance charge?

• The total amount of money the borrower must pay for borrowing the money.

• The total amount a bank is paying when money is borrowed.

• The total amount of interest owed as well as the amount of money that is being borrowed.

Braden is buying a tiny home for $30,000.00 She makes a down payment of $10,000.00 and decides to finance the rest through her bank. The loan officer lets her know that her payments will be $420 for 60 payments. Determine the finance charge.

• $20,000.00

• $25,200.00

• $5,200.00

• $30,000.00

If you decide to pay off a loan early, the amount of the reduction of the finance charge from paying off the loan early is called ______________.

The monthly payment on a loan is $67.16 where there are 24 monthly payments at an APR of 7%. You decide to pay off this loan on payment 18. How much money on interest will be saved?

• $826.07

• $8.09

• $402.96

A credit card is a common example of a(n) _____________.

A $1200.00 purchase on a credit card was made with no previous interest owed. Determine the minimum monthly payment that needs to be made the next month when interest owed is 1.2% of the outstanding principal. Round your answer up to the next whole dollar.

The average Daily Balance Method is a way of calculating the finance charge of a credit card. First, we find the balance due after each transaction. Second, we find the number of days that the balance did not change between each transaction. Third, We multiply the balance due by the number of days the balance did not change. What are the next two steps?

• 4) Add all of the charges up 5) Subtract any payments

• 4)Find the sum of the products from step 3. 5) Divide by the number of days in a week.

• 4)Find the sum of the products from step 3. 5) Divide by the number of days in the month.

• 4) Add all of the products. 5)Multiply by the interest rate.

Jake is taking out a cash advance for $2100.00 on April 3rd. A daily interest rate of 0.588% is charged. If Jake repays everything on April 10th, how much did Jake pay for the cash advance?

• $86.44

• $2186.44

• $2200.00$

• $87.00