5.1: Promissory Notes
Written promise that you will repay money to a lender on a certain date.
Promissory note
tells you how much interest a note is accumulating per day
daily interest factor
Part of the purchase price paid up front
down payment
a fee charged if you pay the loan off early
prepayment penalty
The cost of credit for one year, expressed as a percentage.
Annual percentage rate
The amount of money borrowed on a promissory note
principal
Many lenders calculate payments so that each payment is the same amount. This payment method is called....
the level payment plan
The finance charge divided by the amount financed times $100 is....
Finance charge per $100 of amount financed
Phil borrowed $3,200 to pay for a new roof. He signed a 6 month promissory note at 12% interest. Find the amount of interest Phil must pay. Then find the amount he must repay to her bank when the note is due. (two answers)
$192; $3,392
What is the daily interest factor for $1,250 borrowed at 13.5% exact interest?
$0.4623
You can by an xbox for $250 cash or pay $50 down and the balance in 12 monthly payments of $18. What is the installment price?
$266
Nick has a 4-year. $9,500 car loan at 8%. After paying on the loan for 36 months, he has a balance on $2,666.13. He decides to pay off the loan with the next payment. How much will he have to pay?
$2,683.90
Kyla borrowed $400 on a 12-month loan with a finance charge of $39. Find the finance charge per $100 of the amount financed and the annual percentage rate. (two answers)
$9.75; 17.5%
Seth signed a promissory note for $1,500 at 8% interest for 90 days. Find the interest and the amount due he will pay when the note is due using ordinary interest. (two answers)
$30, $1,530
Find the ordinary interest from March 5 to May 12 on $5,500 at 8% interest.
$83.11
A washing machine costs $525 on the installment plan. you must make a down payment of $75 and make payments for 15 months. What will be your monthly payments?
$30
Pete borrowed $10,500 for 5 years. His monthly payment was $215.42. How much did he pay back to the lender?
$12,925.20
Find the APR for a loan with finance charge of $6.25 per $100 for 9 payments.
14.75%
Jack paid $420 in interest on a 6 month note for $5,600. Find the rate of interest he paid (percentage).
15%
Find the exact interest from June 13 to August 15 on $6,200 at 9%.
$96.31
Find the installment price and the finance charge that Jerry paid for a $1,200 television because he paid $95 down and $78.85 a month for 18 months. (two answers)
$1,514.30; $314.30