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6.1 Introduction to Lending

6.1 Introduction to Lending
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  • Math Help

    Lending institutions use many terms that borrowers may find confusing. For instance, in Example 3, the "cost of credit" is $141.06 and the "loan proceeds" are $1007.94. What does this mean? This means that you paid $141.06 to borrow $1007.94. So, loan proceeds are how much money you receive, and cost of credit is how much you pay to get that money. As you encounter new terms, try writing definitions of these terms in your own words. This will help you learn the new terms and you will be able to better understand and use them.

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  • Checkpoint Solution

    a. The total amount due is

    The loan proceeds are

    The cost of credit is

    b. The total amount due is

    The loan proceeds are $250,000.

    The cost of credit is

  • Comments (3)

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    system user
    Ron Larson (author)6 years ago |
    He's sitting on the fridge because he is so happy that he got a new one.
    0
    system user
    Guest   6 years ago |
    Why is the guy sitting on the fridge.
    0
    system user
    Ron Larson (author)6 years ago |
    In Example 3, you can see the basic pro and con of buying on credit. The "pro" is that you get possession of the refrigerator now. The "con" is that you have to pay more than if you were able to buy it with cash now.
    0
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