Fixed Term Loans Buying a Car.

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Presentation transcript:

Fixed Term Loans Buying a Car

Amortization – The process of calculating a loan so that all payments are the same In Microsoft Excel use the payment function to determine the payments on a fixed term loan with a fixed interest rate. =PMT (interest rate, # of periods, amt borrowed)

Terms of the loan Annual percentage rate – APR Length of the loan - # of years or months Any additional fees or charges Total cost of credit

Major factors considered to qualify for a loan Collateral – what assets are going to be pledged as security? Capacity – what income is to be used to repay the loan? Character – includes things like past credit history, legal problems, etc. Cosigner – requiring a third party to “guarantee” repayment