Personal Loans (Practice)
John is planning to take out a personal loan for $4,500 to buy a car. He would like to keep his monthly payments at or below $150.00 and pay the loan off in three years. Which of the following is the greatest interest rate John can accept and still meet his criteria?
c. 12.25% compounded monthly
Sam would like to use his extensive stamp collection as collateral for a secured loan. Sam has documentation that says his stamp collection is worth $10,525.00. Sam's bank has a policy that permits loan officers to lend no more than 82.5% of the value of the collateral. What is the maximum loan amount Sam can get from his bank using his stamp collection as collateral?
a. $8,683.13
Determine the monthly payment of a loan for $3,000 at 7.5% interest compounded monthly for 36 months.
a. $93.32
Judy needs to take out a personal loan for $2,500 for tuition assistance. Her bank has offered her one of the four loan packages outlined in the chart below. Determine which of the four loans will be cheapest for Judy in the long run. All interest rates are compounded monthly.
a. loan A
Rachel took out a personal loan for $4,500 with a monthly payment of $173.06 for 36 months. Determine the finance charge on Rachel's loan if she takes all 36 months to pay it off.
b. $1,730.16
Calculate the monthly payment for a loan of $7,500 with an 11% interest rate compounded monthly over a period of 5 years.
b. $163.07
Determine the finance charge on a $6,500 loan with an interest rate of 9.5% compounded monthly over 36 months.
c. $995.56
Cindy would like to borrow money from her bank to restore her collectible car. It will take $12,000 to fully restore the car. Cindy's bank offers secured loans at 89% of the collateral value. How much collateral does Cindy need to offer to get a loan big enough to allow her to fully restore her car?
d. $13,483.15
In calculating the monthly payment for a loan with an 8.5% interest rate compounded monthly, what value should be used for i, the interest rate per period, as it appears in the following formula?
d. 0.0071
Ed needs to take out a loan for $7,000 to purchase a car. His bank has offered him a loan at 10.0% interest, compounded monthly, for 36 months or 10.5% interest, compounded monthly, for 24 months. Ed's goal is to save as much money as possible by the time he pays off the loan. Which of the following statements best describes what Ed should be thinking?
d. Since the finance charge for the 24 month loan is lower, this loan will save more.