Upload
chester-johnson
View
222
Download
0
Embed Size (px)
Citation preview
LoansClaire W, Emily M, Lindsey M, Andrea B
What can people get a loan for?
You can get a loan for just about anything like an auto loan, house loan, or student loan
What is APR?• APR stands for Annual Percentage Rate.
• Reflects the effective cost of your loan on a yearly basis
• Takes into account fees and costs like interest, mortgage insurance, most closing costs, discount points and origination fees.
• May change with any loan term, loan amount, or other criteria because it is only an estimate.
• Intended to give you more info on what you’re really getting and the true cost of the loan, making fair comparisons with the lender fee.
Interest RatesHome Mortgage:The interest rates are determined due to how much the loan is and what type
of loan it is30-Year Fixed 30 year fixed loan-you pay the loan off in 30 years and for all those 30 4.625% years the interest rate will be the same
$1,028.2815-Year Fixed 15 year fixed loan- you pay off the loan in 15 years and for all
those 15 years 3.750% the interest rate will be the same
$1,454.445-Year ARM 5 year ARM- you pay the loan off in 5 years however the
interest rate 3.500% changes annually due to the market of mortgages
$898.09
Should you shop around for a loan?
• You should be shopping around for a loan because different banks have different interest rates
• Some banks could have high interest rates and low penalties and vice versa
• It’s good to explore your options before you pick one.
Car Loan Example2014 Ford Taures
Lender Loan Principal Loan Term Interest Rate Monthly Payment
Total amount
Scenario 1 $18978 36 months 6.75% $562.75 $20259.02
Scenario 2 $18978 48 months 4.75% $414.16 $19879.46
Scenario 3 $18978 48 months 5.99% $419.06 $20114.78
Scenario 4 $18978 36 months 4.50% $564.54 $20323.44
Scenario 5 $18978 60 months 3.75% $347.37 $20842.20
• Scenario 2 would be best for people just starting out because it has a low interest rate and has the lower monthly payments of $414.
• Scenario 1 would be the best for people who have money in savings, because they would be able to pay off the loan faster, because the monthly payments are $563.
Prioritizing Paying Off Loans
• If your loans are relatively close in amount you should pay off the loan with the higher interest rate.
• However if you have a loan with a high balance with a low interest rate you should put money towards that loano little interest on a lot of money
Example
Car loan:
Amount owed: $9,000
Interest rate: 3.99%
Student loan:
Amount owed: $28,000
Interest rate: 7.50%
You should pay off the student loan first because the amount is higher and the interest rate is a lot higher too. The longer it takes for you to pay off that loan, it will cost you a lot more money than if it takes you longer to pay off the car loan.