1. Financial Literacy: Odds and ends
Spring Semester 2019
Stater

2. Borrowing Money Down payment Interest Collateral Principal
The full amount of money you originally borrow
Down payment
Upfront cash payment for a good you want to purchase
Interest
Must repay a percentage of your principal
Collateral
Piece of property that reduces the lender’s risk

3. Types of Loans Credit cards Student loans Personal loans
For education
Personal loans
Mortgage loans
For homes
Auto loans

4. Insurance
A financial service that allows a consumer to share liability with a company
Can help you manage financial risks

5. How It Works
Insurance companies create a pool of funds to handle risk
Consumers pay fees to buy insurance
Fees are pooled together into a large fund
When consumers experience a loss, they are compensated from the pool in a payout

6. 3 Types of Payments
Copayment – may have to be paid to share the costs of a payout
Often for doctor’s appointments
Lowers shared expenses for the pool
Premium – must be paid to take part in a pool (often monthly)
Deductible – must often be paid before making a claim

7. Common Types of Insurance
Homeowner’s insurance
Renter’s insurance
Auto insurance
Health insurance
Disability insurance
Life insurance