Loans. Section 4.2. Loans (4.2). Whenever you borrow money, you must sign an agreement. Promissory Note States the conditions of the loan Should read this carefully before signing. Loans (4.2). Some Key Terms: Cosigner: Life Insurance: Wage Assignment:.
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Another person who agrees to pay back the loan if the borrower is unable to do so.
Sometimes required, in the event the borrower dies before loan is paid off
Voluntary deduction from your paycheck to pay off the loan
Involuntary form of wage assignment
The last payments can be higher than the previous. These are called balloon payments.
From chart: 45.46
For $4,000, multiply 45.46 by 4
= $181.84 monthly payment
From chart: 19.57
For $41,000, multiply this by 41
From chart: 24.53
For $5,000, multiply this by 5
Monthly Payment = $122.65
How much would this cost for 4 years?
From chart: 26.50
For $10,000, multiply this by 10
9 ½ %, 9%, 9 %, 9.45%, 9 %
3) How many more monthly payments are made for a five-year loan than for a two-year loan?
2 ½ year loan?
6) Rachel has a $10,000, three-year loan with an APR of 7.25%.
8) The policy of the Broadway Pawnshop is to lend up to 35% of the value of a borrower’s collateral. John wants to use a $3,000 ring and a $1,200 necklace as collateral for a loan. What sit eh maximum amount that he could borrow from Broadway?
M = Monthly Payment
P = Principal
r = Interest Rate
t = Number of Years