Section 12.4 Personal Property Loans

Vocabulary Personal property: Items that can be moved from one location to another. (i.e., car, boat, stereo…) Real Estate: Land and homes that cannot be moved.

Formula for Amortization Amortization = repayment of loan Formula: Payment = loan amount x # from table (p 521)

Marine Ltd. Paid $300,000 down on a tugboat costing $1,800,000 Marine Ltd. Paid $300,000 down on a tugboat costing $1,800,000. The firm financed the balance at 12% per year for 4 years. Find (a) the monthly payment and (b) the balance after the first payment.

Blue Lake Marina purchased a party barge costing $85,700 with a down payment of $20,000 and financed the balance at 8% for 4 quarters. Find the payment and construct an amortization schedule for the first 2 quarters.

Finding Monthly Payments Use the loan payoff table on p 522 instead of amortization table. Uses # of months and APR… not i and n Payment = Loan x # from loan payoff Amount table (p 522)

After his down payment, Josh Crandall needs to borrow $12,800 for 48 months to buy a truck. He can finance it at 8% per year if he has excellent credit but, at 15% per year if he has poor credit. Find (a) the monthly payment at both rates, (b) the total finance charge for both rates, and (c) the extra cost of having poor credit.