INSTALLMENT LOANS Chapter 5, Section 3. I can… Calculate the installment price and finance charge on an installment plan purchase. Calculate the number.

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INSTALLMENT LOANS Chapter 5, Section 3

I can… Calculate the installment price and finance charge on an installment plan purchase. Calculate the number and amount of monthly payments. Calculate the interest, principal payment, and new balance on an installment loan.

What if I want to make payments on a purchase instead of paying for it all at once? An installment plan is when you borrow money to buy something and pay it back in payments. You may be required to make a down payment— which is a part of the purchase price.

So why don’t we put everything on a payment plan? The installment price is higher than the cash price because the seller adds a finance charge. Example 1, p Check your understanding A & B

So how much will my monthly payment be? Some people buy things if they can “afford the payment.” So if you are given the installment price and the down payment—you’ll need to figure out what the payment will be. Installment price – down payment = remainder to pay. Remainder to pay/# of months = monthly payment Example 2, p. 186 Check your understanding C & D

How can I save a little money by going to a bank rather than using an installment plan at a store? Banks offer installment loans—which typically have lower interest rates than a retail store. They work the same as an installment plan—equal payments over time that include interest/finance charges. Example 3, p. 187 Check your understanding E & F