Intro to Loans and Credit

Imagine you're buying a new car and you take out a five year loan of $20,000 at a fixed interest rate of 5%.

You agree with the lender to make regular monthly payments.

Now let's google "car loan calculator" and input the numbers.

How much do you pay in total? And how much of that is interest? Figure this out before looking at the answer below.

If you said a total of $22,645 total and $2,645 in interest you were correct!

Let's imagine you have a line of credit of $30,000 to buy a car.

Using cars.com find a vehicle you'd like to purchase and record the cost of the vehicle on your worksheet.

Then use the car loan calculator to determine the total cost of your loan at a fixed rate of 6%. Record these numbers on your worksheet.