We’ve learned that auto loans and mortgages operate in similar ways: You make a down payment, take out a loan for the rest of the purchase and are given a term to pay back the loan along with an interest rate. Once the lender knows all of this information, they can set a monthly payment. Complete the activity to explore how lenders calculate a monthly payment based on the particular criteria for your loan.
Finding the right car and home is exciting, but an important part of making that final decision is being sure you can afford this often expensive purchase. If you don’t have enough money saved to pay the full price upfront, you may choose to take out a loan. In this activity, you will practice calculating monthly costs of auto and mortgage loan payments, taking into account how much money you need to borrow, how long the loan is, and annual interest rates.