Algebra II Chapter 2 Lesson Plans

Math Money Management – Chapter 7 Lesson Plans

Section 7.5 – Paying off Simple Interest Installment Loans

Enduring Understandings: The student shall be able to: 1. Compute the final payment when paying off a simple interest installment loan.

Standards: 1. Topic: Borrowing Standard: Computes interest and service charge for various types of loans.

Essential Questions: How do we determine how much we owe if we want to pay off a loan “early”?

Warm up/Opener: GHSGT problems Skills

Activities: New Vocabulary: Final Payment: The previous balance plus the current month’s interest.

Final Payment = Previous Balance + Current Month’s Interest.

BOOK: The Truth-in-Lending Law specifies that if a loan is paid off early, the lender must disclose the method for paying off the loan. Because interest is always paid on the unpaid balance, you just pay the previous balance plus the current month’s interest if you pay off a simple interest installment loan before the end of the term. The final payment is the previous balance plus the current month’s interest.

Why would you want to pay off a loan early? To save the interest charges.

Why is it hard to pay off a loan early? You have to come up with all the cash.

Are you saving the largest share of the interest? No – the largest part of the interest is paid at the beginning of the loan.

Watch for pre-payment penalties in the contract.

Assessments: Class work: pg 228, # 1 - 5

HW: pg 228 – 229, # 6 – 15 all (10)