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SECTION. 8-2. pp. 287-289. Installment Loans. Key Words to Know. installment loan (p. 287) A loan repaid in several equal payments over a specified period of time. down payment (p. 287) A portion of the cash price of an item that has to be paid before financing the rest on credit.
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SECTION 8-2 pp. 287-289 Installment Loans
Key Words to Know installment loan (p. 287) A loan repaid in several equal payments over a specified period of time. down payment (p. 287) A portion of the cash price of an item that has to be paid before financing the rest on credit.
Key Words to Know amount financed (p. 287) The portion of the cash price that is owed on an item after making the down payment.
Formula 1 Amount Financed = Cash Price – Down Payment
Formula 2 Down Payment = Amount × Percent
Example 1 Quint Terintino is buying a new refrigerator for $1,399. Terintino made a down payment of $199 and financed the remainder. How much did Terintino finance?
Example 1 Answer Step: Find the amount financed. Cash Price – Down Payment $1,399 – $199 = $1,200
Example 2 Rebecca Clay purchased a washer and a dryer for $1,140. She used the store’s installment credit plan to pay for the items. She made a down payment and financed the remaining amount. What amount did she finance if she made a 20 percent down payment?
Example 2 Answer: Step 1 Find the 20 percent down payment. $1,140 × 20% = $228
Example 2 Answer: Step 2 Find the amount financed. Cash Price – Down Payment $1,140 – $228 = $912
