Reducing-Balance Loans (HSC SSCE Mathematics Standard): Flashcards

Interest calculated on current balance, not original amount

As balance decreases, interest charged also decreases over time

$ext{Loan payment} imes ext{Number of repayments}$

$ext{Total to be paid} - ext{Principal}$

The original amount borrowed

Multiply table value by number of thousands borrowed

Higher monthly payments but much less total interest paid

Dramatically reduces time to repay and total interest charged

Initial cost of processing the loan application

Cost of assessing market value of a property