Understanding Loans and Payments

This video tutorial covers installment buying, including fixed installment loans, down payments, and finance charges. It provides examples of calculating costs for installment purchases and compares different financing options. Additionally, it explains the unpaid balance method for credit cards, focusing on finance charges and new balance calculations.

What is installment buying?

• Borrowing money from a bank to buy an item.

• Leasing an item for a short period.

• Making periodic partial payments for an item.

• Paying for an item in full at the time of purchase.

What is a fixed installment loan?

• A loan with equal payments.

• A loan with no interest.

• A loan with variable payments.

• A loan with a balloon payment at the end.

What is a down payment?

• The monthly payment for a loan.

• The interest paid on a loan.

• The total cost of an item.

• The initial amount paid at the time of purchase.

How is the amount financed calculated?

• Total installment price plus the finance charge.

• Price of the item minus the down payment.

• Price of the item plus the down payment.

• Total installment price minus the finance charge.

What does the total installment price include?

• Only the finance charge.

• The down payment only.

• The sum of all payments and the down payment.

• Only the price of the item.

In the student example, what is the down payment for the furniture?

• $400

• $200

• $500

• $300

What is the finance charge for the student example?

• $700

• $408

• $500

• $600

How much is the monthly payment for the student example?

• $50.56

• $65.00

• $58.56

• $60.00

In the iMac example, what is the finance charge for the first situation?

• $779.40

• $979.40

• $879.40

• $679.40

What is the monthly payment in the first iMac financing situation?

• $34.64

• $44.64

• $54.64

• $64.64