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© 2014 Pacific Crest
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A
Successful Performance
Successful application of your learning looks like this
As you begin to apply what you’ve learned, you should have a good idea of what success looks like.
A SUCCESSFUL
PERFORMANCE
I calculate the cost of credit and loans. I...
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Calculate payments on loans
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Compute the total amount and cost of credit on bank and car loans
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Understand the cost of credit and use my understanding to make wise decisions about
credit and loans
D
emonstrate Your Understanding
Apply it and show you know in context!
1. How much would you save on interest on your new car if you financed it for 3 years instead of 5?
2. If you selected a 15-year mortgage on the house you want to buy instead of a 30-year one, how much
more would you have to pay each month? How much would you save in interest in the long run?
3. What is the most important thing you can do to improve your credit score and how might you do that
in your present financial situation?
4. Sometimes banks or other lending agencies will allow you to finance a car for more than 5 years, but
at a higher interest rate. What would be the advantages and disadvantages to doing so?
5. With the car and house you selected and assuming that you have no other debt (probably an unrealistic
assumption), what would your monthly income need to be in order for your debt-to-earnings ratio to
be below 36%?
H
ardest Problem
How hard
can
it be? Can you still use what you’ve learned?
Based on the Models, the Methodologies, and the Demonstrate Your Understanding (DYU) problems in
this activity, create the
hardest
problem you can. Start with the hardest DYU problem in this experience
and by contrasting and comparing it with the other DYU problems, play “What if” with the different
conditions and parameters in the various problems.
Can you still solve the problem? If so, solve it. If not, explain why not.
What are the conditions and parameters that make a problem where you calculate the cost of credit and loans
a difficult problem to solve?
T
roubleshooting
Find the error and correct it!
Your friend Alex is graduating and looking to buy a beautiful new car that costs $27,000. He plans to
pay for it over 6 years, so he expects to pay $4500 per year, or $375 per month, an amount that he thinks
he can afford. What is the problem with Alex’s reasoning? Help him determine his real cost for this car.
8.3 Credit and Loans