2.13.17 Intro to Consumer Credit.notebook

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February 13, 2017

Chapter 4: Consumer CreditMonday February 13th, 2017

2.13.17 Intro to Consumer Credit.notebook

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February 13, 2017

Absent students:

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Tuesday: Quiz #3 - Make arrangements to take

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Thursday: "Failed Banks" Assessment Extension - Make arrangements to make-up

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Friday: "Student Loan Sinkhole" Video (25 minutes)Extra Credit Opportunity - Based on video (make arrangements if interested). Video link on class web page.

Last Week:

2.13.17 Intro to Consumer Credit.notebook

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February 13, 2017

Section 4.1 Intro to Consumer Credit

What do you know about Consumer Credit?

True or False? Correct false answers.1. Credit can mean a deposit in the bank or purchasing something without having to pay for it right away.

2. People who use credit are called creditors.

3. A down payment is when a customer pays the total purchase price of an item at the time of purchase.

Answer the following based on your present knowledge.

4. What is an installment plan?

5. What does it mean for a car, a home or a bank account to be considered an asset? 6. What is a FICO score?

7. How can a FICO score help/hurt a consumer?

8. What is earning power and how does it relate to credit?

9. What is a finance charge?

2.13.17 Intro to Consumer Credit.notebook

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February 13, 2017

Options for purchasing items?

2.13.17 Intro to Consumer Credit.notebook

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February 13, 2017

Example 1Heather wants to purchase an electric guitar. The price of  the guitar with tax is $2,240. If she can save $90 per month,  how long will it take her to save up for the guitar? 

Solution:Divide:  2,240  ÷ 90 ≈ 24.9 It will take Heather about 25 months to save for the guitar.

2.13.17 Intro to Consumer Credit.notebook

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February 13, 2017

Example 2:Heather, from Example 1, speaks to the salesperson at the music store who suggests that she buy the guitar on their installment plan. The installment plan requires a 15% down payment. The remainder, plus an additional finance charge, is paid back on a monthly basis for the next two years. The monthly payment is $88.75. What is the finance charge?

Solution:Find the down payment:   2,240  (.15) = 336 Heather will pay $336 at the time of purchase.Find the sum of her monthly payments:  88.75  (24) = 2,130The sum of her monthly payments is $2,130.

Find her total cost:   336 + 2,130 = $2,466The total cost is $2,466.Find the finance charge: Total cost  ­  purchase price:  2,466 ­ 2,240 = 226The finance charge is $226.

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February 13, 2017

Example 3:Carpet Mart is trying to increase sales, and it has instituteda new promotion. All purchases can be paid on their deferred payment plan with no interest, as long as the totalis paid in full within six months. There is a $20 minimum monthly payment required. If the Siler family buys carpeting for $2,134 and makes only the minimum payment for five months, how much will they have to pay in the sixth month? 

Solution:Find the total the Siler's pay for the 5 months:   20(5) = 100  

Subtract to find what is owed for the sixth month:Purchase price ­ amount paid:  2,134 ­ 100 = 2,034  The Siler's will pay $2,034 in the sixth month.