Question

be original and use your own word

Please choose one topics of your choice from chapters 5-7 and describe in your own words what you learned providing an explanation of 200 words for each topic

I choose Loan types and loan Amortization

Answer 1

Debt amortization is the process of repaying debt in equal installments.In amortized loan part of each payment goes towards interest and any balance is used to reduce the principal. As the balance of debt gradually decreases, a progressively larger portion of each payment goes towards reducing the original balance. Therefore, a amortization loan is for a specific dollar amount that has to be repaid by a certain date, usually in equal monthly installments. A car loan and a home loan usually meet this definition and so the loan is usually amended. As mentioned above, a portion of the payment goes towards the interest cost and the remaining payment goes towards the principal amount with each payment. The reason is that higher interest is paid at the beginning of the loan term at the end of the loan term, that is that the interest is calculated on the current amount and hence the interest amount will become progressively smaller when the principal balance is paid. . And the closing balance of the loan decreases with each payment (Loan Modification, 2002).

An amortization table can be used in one's personal and professional life to determine annual loan payments when the amount borrowed, the interest rate, and the length of the loan are known. For example, an 8-year loan of $ 30,000 made at an annual rate of 12 percent would require $ 6,039 in payments each year, or $ 503.25 per month. If a person wants to buy a luxury car for $ 30,000 and the most or he can spend every month in car payments was around S $ 500 then an 8 year loan may be the only way to finance this vehicle. . Clearly, there are other applications for refinement tables. Provided someone knows how much they are borrowing, the interest rate and loan length determine the annual payment - and the annual payment.