Loans (Grade 12 NSC Matric Mathematical Literacy): Flashcards
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Loans definition
Loans definition
Financial arrangements where people borrow money
Why interest is charged
Why interest is charged
Money has time value; lenders give up use of their money
Monthly instalment
Monthly instalment
Amount paid monthly towards loan (principal + interest)
Initiation fee
Initiation fee
One-time charge to process loan application
Monthly admin fee
Monthly admin fee
Additional monthly cost for administrative services
Longer repayment period → monthly payment
Longer repayment period → monthly payment
Lower monthly payments
Longer repayment period → total cost
Longer repayment period → total cost
Higher total cost (more interest paid)
Total loan cost formula
Total loan cost formula
Init fee + [instalments × (monthly payment + admin fee)]
Lower monthly payment means
Lower monthly payment means
Higher total cost overall
Shorter loan term trade-off
Shorter loan term trade-off
Higher monthly payment but lower total cost