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Fixed Term Loans

Learn how to calculate and manage fixed term loans when buying a car using amortization. Use Microsoft Excel's payment function to determine regular payments on a loan with a fixed interest rate, considering factors such as APR, loan length, additional fees, and total cost of credit.

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Fixed Term Loans

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  1. Fixed Term Loans Buying a Car

  2. Amortization – The process of calculating a loan so that all payments are the same In Microsoft Excel use the payment function to determine the payments on a fixed term loan with a fixed interest rate. =PMT (interest rate, # of periods, amt borrowed)

  3. Terms of the loan • Annual percentage rate – APR • Length of the loan - # of years or months • Any additional fees or charges • Total cost of credit

  4. Major factors considered to qualify for a loan • Collateral – what assets are going to be pledged as security? • Capacity – what income is to be used to repay the loan? • Character – includes things like past credit history, legal problems, etc. • Cosigner – requiring a third party to “guarantee” repayment

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