Installment Loans

Installment Loans pp. 287-2898-2SECTIONSECTION

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Copyright © Glencoe/McGraw-Hill MBA, Section 8-2, Slide 2 of 17

8-2

Section ObjectiveSection ObjectiveCalculate:

• amount financed on an installment loan


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installment loan (p. 287)

A loan repaid in several equal payments over a specified period of time.

down payment (p. 287)

A portion of the cash price of an item that has to be paid before financing the rest on credit.

Key Words to KnowKey Words to Know


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amount financed (p. 287)

The portion of the cash price that is owed on an item after making the down payment.

Key Words to KnowKey Words to Know


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Amount Financed = Cash Price – Down Payment

Formula 1Formula 1


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Down Payment = Amount × Percent

Formula 2Formula 2


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Before the bank will give him a loan, what does Chen have to do first?

A Picture Perfect Loan p. 287A Picture Perfect Loan p. 287


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Tasheka Quintero is buying a new refrigerator for $1,399. Quintero made a down payment of $199 and financed the remainder.

How much did Quintero finance?

Example 1Example 1


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Step: Find the amount financed.

Cash Price – Down Payment

$1,399 – $199 = $1,200

Example 1 AnswerExample 1 Answer


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Rebecca Clay purchased a washer and a dryer for $1,140. She used the store’s installment credit plan to pay for the items. She made a down payment and financed the remaining amount.

What amount did she finance if she made a 20 percent down payment?

Example 2Example 2


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Find the 20 percent down payment.

$1,140 × 20% = $228

Example 2 Answer: Example 2 Answer: Step 1Step 1


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Find the amount financed.

Cash Price – Down Payment

$1,140 – $228 = $912

Example 2 Answer: Example 2 Answer: Step 2Step 2


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Matt Yokohama purchased a fountain for his newly landscaped backyard. The fountain cost $677. He made a down payment of 15 percent.

What amount did he finance?

Practice 1Practice 1


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$575.45

Practice 1 AnswerPractice 1 Answer


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Janelle Lewis purchased a new dishwasher for $425. She made a 20 percent down payment and financed the remaining amount.

Find the down payment and the amount financed.

Practice 2Practice 2


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Down payment: $85

Amount financed: $340

Practice 2 AnswerPractice 2 Answer

Installment Loans8-2END OF SECTIONEND OF SECTION

Installment Loans

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