Students Enrolled
0
Join the Money Mentor community and make a positive impact.
As part of our commitment to giving back, all course members pledge to donate a minimum of $1 tojumpstart.org
Your contribution supports financial literacy for students.
Return to Homepage
Loans and debt
Chapter 1: Understanding Types of Loans
Estimated Duration: 1 hour
Chapter 2: Understanding Interest Rates and Loan Terms
Estimated Duration: 1 hour
Estimated Course Duration: 1 hour
Basic Concepts Used:
Learning Objective:
By the end of this lesson, students will be able to identify different types of loans, understand their features and purposes, and know the basic steps involved in applying for a loan.
Personal Loans
1. Definition: Unsecured loans typically used for personal expenses such as medical bills or consolidating debt. 2. Features: Fixed or variable interest rates, repayment terms usually ranging from 1 to 5 years. 3. Purpose: General use, including debt consolidation, home improvements, or emergency expenses.
Student Loans
1. Definition: Loans designed to help students pay for education-related expenses. 2. Features: May be federal or private, often have deferred payments while in school, with interest rates that can be fixed or variable. 3. Purpose: Cover tuition, books, and living expenses while pursuing a degree.
Auto Loans
1. Definition: Loans used to purchase a vehicle. 2. Features: Secured by the vehicle, typically have fixed interest rates and terms of 3 to 7 years. 3. Purpose: Purchase new or used cars.
Mortgage Loans
1. Definition: Long-term loans used to purchase real estate. 2. Features: Secured by the property, long repayment terms (15 to 30 years), and fixed or variable interest rates. 3. Purpose: Buying or refinancing a home.
Loan Application Process
1. Steps: Research loan options, check credit score, gather necessary documents, complete the application, and wait for approval.
Real-life Examples
Case studies of individuals using different types of loans, such as financing a car, paying for college, or buying a home.
Additional Resources:
Interactive Elements:
Estimated Course Duration: 1 hour
Basic Concepts Used:
Learning Objective:
By the end of this lesson, students will be able to differentiate between fixed and variable interest rates, understand the terms and conditions of loans, and calculate the total cost of a loan.
Types of Interest Rates
1. Fixed Interest Rates: Stay the same throughout the life of the loan, providing predictable monthly payments. 2. Variable Interest Rates: Can change over time based on market conditions, which can lead to fluctuating payments.
Loan Terms and Conditions
1. Definition: The specific details of a loan agreement, including repayment schedule, interest rate, and any fees or penalties. 2. Impact: Affects monthly payments and the total cost of the loan over its life.
How Interest Affects the Total Cost of a Loan
1. Calculation: Total cost of a loan includes principal and interest. Interest rates and loan terms significantly impact the overall cost. 2. Examples: Calculate the total interest paid on a loan over its term for both fixed and variable rates.
Real-life Implications
Examples of how choosing different interest rates and loan terms can affect monthly payments and the total cost of borrowing, including scenarios of fixed vs. variable rate loans.
Additional Resources:
Interactive Elements: