A Bank Loan

It is okay to go into debt for things you don't really need.

• True

• False

You should get your loan from the place that charges the highest interest.

• True

• False

Always quickly sign papers that are offered to you.

• True

• False

If you make a big down payment, you'll pay interest on a larger amount of money.

• True

• False

A longer term loan is ideal because it will have lower monthly payments.

• True

• False

If you are not careful you may take out a loan on an item that will break before the loan is complete.

• True

• False

The principal of a loan is

• the percentage of the loan that must be paid to the lender in addition to the loan amount.

• the total amount paid when the loan is paid off.

• the amount of money loaned before any fees or interest.

• Mr. Pirner?

If a person borrows $5,000 on a five-year loan with a 4.5% interest rate, they face a monthly payment of $93.22 for the following five years.

What is the principal amount of this loan?

• $5,000

• 4.5%

• $93.22

• 5 years

If a person owes $10,000 on a credit card at 6% and they pay $200 each month, it will take them 58 months, or nearly five years, to pay off the balance.

What is the interest rate on this loan?

• $10,000

• 6%

• $200

• 58 months

A person owes $10,000 on a loan with a 20% interest rate, and $200 monthly payments over 108 months, or nine years.

What is the term for this loan?

• $10,000

• 20%

• $200

• 9 years