Understanding Down Payments and Interest

This video tutorial explains how to calculate the finance charge on a single payment loan. It begins by introducing the concept of a finance charge and the importance of understanding down payments. The tutorial then walks through a practical example, calculating the finance charge for a sofa purchase with a 10% down payment and a 25% annual interest rate. The video concludes with the final calculation, showing that the finance charge amounts to $281.

What is the main topic discussed in the video?

• Calculating finance charges on a single payment loan

• Understanding different types of loans

• How to save money on loans

• Investing in real estate

What is the cash price of the sofa mentioned in the problem?

• $1,500

• $1,250

• $1,750

• $1,000

What percentage is required as a down payment for the sofa?

• 10%

• 15%

• 5%

• 20%

What is the annual interest rate on the loan?

• 30%

• 25%

• 15%

• 20%

What does the term 'down payment' refer to?

• The final payment on the loan

• The interest charged on the loan

• The initial payment on the loan not subject to interest

• The total loan amount

What is the finance charge?

• The interest rate percentage

• The cost to borrow money

• The down payment amount

• The total amount of the loan

How much of the sofa's price will be charged interest after the down payment?

• $1,125

• $1,375

• $1,000

• $1,250

What is the formula to calculate the total amount to be paid including interest?

• Principal amount times interest rate

• Principal amount divided by interest rate

• Principal amount plus interest

• Principal amount minus interest

What is the total amount to be paid after including the 25% interest?

• $1,406

• $1,125

• $1,281

• $1,500

How is the finance charge calculated?

• By multiplying the interest rate by the principal

• By subtracting the principal from the total amount paid

• By adding the down payment to the total amount

• By dividing the total amount by the interest rate