LOANS FOR YOU

NAME OF GROUP MEMBER:

1. NG CHOO ME
2. NG WE YNG
3. TENG SEW WE
W MosL longLerm loans llke home morLgages and some
auLomoblle loans are amorLlzed by paylng Lhe same
amounL aL each paymenL perlod(eg monLhly
paymenL) over a speclfled perlod of Llme(eg 13
years)arL of Lhe paymenL ls lnLeresL and parL ls Lhe
prlnclpal (le amounL borrowed)1he amounL of money
LhaL goes Loward Lhe prlnclpal and Loward Lhe lnLeresL
ln each paymenL varles over Lhe llfe of Lhe loan 1hls
means LhaL Lhe flrsL paymenL ls made up of mosLly
lnLeresL whlle Lhe lasL paymenL ls made up of mosLly
prlnclpal 1hls ls noL unexpecLed because Lhe bank
generally wanLs Lo geL lLs fee(lnLeresL) as soon as
posslble 1he paymenL LhaL you musL make ls
calculaLed by Lhe followlng equaLlon
W aymenL v
1(1+l)
n

l
W Jhere v ls Lhe amounL of Lhe loann ls Lhe number of
paymenLs LhaL are Lo be made and l ls equal Lo Lhe
amounL of Lhe lnLeresL aL each paymenL perlod
W As an example a 133 yearly lnLeresL raLe wlLh
monLhly paymenLs would resulL ln
l 0133
12
W Assume LhaL you have 8M 600 avallable for a down
paymenL Also assume LhaL afLer all expenses are Laken
ouL you have 8M 230 avallable for monLhly paymenLs
Jhlch of Lhe followlng would flL your flnances?
Dea|er r|ce of Car Loan Amount Loan
Durat|on
Interest
ob's used
Cars
8M 829000 8M 769000 3 ?ears 123
Mary's used
Cars
8M 900000 8M 840000 3 ?ears 103
Chong's
Jheels
8M 1030000 8M 970000 4 ?ears 103
Llnda's ueals 8M 620000 8M 360000 2 ?ears 83
Cars by Amlr 8M 720000 8M 660000 23 ?ears 90
or each dealer ln Lhe Lable calculaLe
Lhe monLhly paymenL
( for 8M600 down paymenL)
Dea|er I ayment
ob's used Cars 0123/ 12 001042 8M 23726
Mary's used Cars 0103/12000873 8M 27302
Chong's Jheels 0103/12000873 8M 24833
Llnda's ueals 0083/12000708 8M 23433
Cars by Amlr 009/1200073 8M 24630
JhaL ls Lhe LoLal lnLeresL LhaL you wlll
pay over Lhe llfe of each of Lhe loans?
Dea|er Interest
ob's used Cars (8M23726 x 36)8M7690
8M137130
Mary's used Cars (8M 27302 x 36) 8M 8400
8M 142874
Chong's Jheels (8M 24833 x 48) 8M 9700
8M 222093
Llnda's ueals ( 8M 23433 x 24) 8M 3600
8M 30924
Cars by Amlr ( 8M 24630 x 30 ) 8M 6600
8M 79494
Jhlch one(s) are you quallfled Lo
purchase?
W Chong's Jheels
W Cars by Amlr
cbooqs wbeelskM 248J5
cots by Amlt kM 24650
* 8otb of tbls 2 Jeolet ote qlveo
tbe ptlce less tboo kM 250
eneraLe an amorLlzaLlon Lable for Lhe loan
wlLh Lhe lowesL monLhly paymenL An
amorLlzaLlon Lable shows how much of
each of Lhe paymenL goes Loward Lhe
prlnclpal ?ou need Lo calculaLe only Lhe
flrsL 6 paymenLs and Lhe lasL 6 paymenLs ls
Lhe raLlo of prlnclpal Lo lnLeresL Lhe same
for each paymenL?
ormula for AmorLlzaLlon Lable
raLe (per perlod )
annual lnLeresL raLe
number of paymenL perlods per years
Amlr
8 9 073
12
AMLN1 INS1ALLMLN1 IN1LkLS1 kINCIAL 8ALANCL
8M 6600
1 8M 24630 8M 4930 8M 197 8M 6403
2 8M 24630 8M 4802 8M 19848 8M 620433
3 8M 24630 8M 4633 8M 19996 8M 600436
4 8M 24630 8M 4303 8M 20146 8M 380310
3 8M 24630 8M 4332 8M 20297 8M 360012
6 8M 24630 8M 4200 8M 20430 8M 339363
23 8M 24630 8M 1081 8M 23369 8M 120324
26 8M 24630 8M 904 8M 23746 8M 96778
27 8M 24630 8M 726 8M 23924 8M 72834
28 8M 24630 8M 346 8M 24103 8M 48730
29 8M 24630 8M 366 8M 24284 8M 24466
30 8M 24630 8M 183 8M 24466 8M 0
AMLN1 IN1LkLS1 kINCIAL kA1IC
1 8M 4930 8M 197 14
2 8M 4802 8M 19848 141
3 8M 4633 8M 19996 143
4 8M 4303 8M 20146 143
3 8M 4332 8M 20297 147
6 8M 4200 8M 20430 149
23 8M 1081 8M 23369 1218
26 8M 904 8M 23746 1263
27 8M 726 8M 23924 133
28 8M 346 8M 24103 1441
29 8M 366 8M 24284 1663
30 8M 183 8M 24466 11337
W 1he raLlo lncreaslng by
small amounL (02) ln Lhe
flrsL 6 paymenL
W 1he raLlo ln Lhe lasL 6
paymenL lncrease ln a huge
number
or each dealer ln Lhe Lable calculaLe
Lhe monLhly paymenL
(for 8M 700 down paymenL)
Dea|er I ayment
ob's used Cars 0123/ 12 001042 8M 23391
Mary's used Cars 0103/12000873 8M 26977
Chong's Jheels 0103/12000873 8M 24329
Llnda's ueals 0083/12000708 8M 23000
Cars by Amlr 009/1200073 8M 24276
JhaL oLher cars would you purchase lf
you could afford anoLher 8M 100 as
down paymenL?
LlnuA'S uLAL
1he prlce offer by Lhe dealer ls
8M 230
Jhlch car should you purchase?
JhaL ls Lhe besL value or lowesL cosL
over Lhe llfe of Lhe loan?
W Cars by Amlr
W 1he lnLeresL raLe ls second lower Lhan oLher
W 1he prlce of Lhe car ls Lhe lowesL
W 1he lnLeresL charge ls lower
W 1he loan duraLlon ls Lhe second shorL Loo
ow could you help Lo reduce Lhe
lnLeresL pald Lo Lhe dealer? Jould
acceleraLed paymenL of Lhe loan help?
W argaln Lhe prlce of Lhe car wlLh Lhe dealer
W uolng some survey wlLh oLher bank whlch
offer Lhe lowesL lnLeresL
W lncreaslng Lhe down paymenL
W ased Lo Lhe quesLlon acceleraLed ln paymenL
would help Lo reduce Lhe lnLeresL pald Lo Lhe
dealer