CL - Simple Interest Loans Lesson

Simple Interest Loans

Introduction

Want to buy a car someday? How about a house? Do you happen to have something like 20K in the bank for a car? Maybe around 300K for a house?

Most people will not have even close to that amount of money available in cash. This is where loans come into play. With a loan, you initially borrow a certain amount of money and are obligated to pay it back at a later time. Usually, this involves a monthly payment AND added fees and interest.

Let’s take a look at some of the concepts that go into these loans so that we are able to make better decisions when deciding to borrow some money. 

Single Payment Loans

In Your Notebook: Please take down important notes, such as formulas, and attempt the practice examples on your own before viewing the solutions!

Allocation of Monthly Payments

In Your Notebook: Please take down important notes, such as formulas, and attempt the practice examples on your own before viewing the solutions!

Paying Off the Loan Early Tabbed Activity

In Your Notebook: Please take down important notes, such as formulas, and attempt the practice examples on your own before viewing the solutions!

Sometimes you are able to pay the balance of a loan early. In this case, to calculate your final payment, you must compute the interest through the current month and add it to your principal balance.

Final Payment = Previous Balance + Current Month's Interest

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