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2. Loan Terms and APR

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Transcript

In this video you will create a summary table and select the fixed aspects of your loan, including APR and term length.

Then, you will create a table of loan amounts.

When you take on a car loan, you pay money to borrow money.

The amount you borrow is called the principal.

The amount a lender charges you to borrow the money is called the APR or annual percentage rate.

There are a lot of factors that determine the APR you can receive, and not all loan types and lenders offer the same rate.

Before you take out a loan, be sure to do your own research.

To start, create a summary table in your spreadsheet so that you can easily see the APR and loan terms.

Freeze seven rows at the top of the sheet.

Select Row 7 and freeze the spreadsheet to the current row.

Now you have space for a summary table.

Type “Rate, APR.”

Below that, type “Term.”

The term is the time it will take you to pay off the loan.

Auto loan terms are usually between 3 and 6 years.

Perform a quick internet search for the current average APR and enter it beside “Rate.”

Then, select a term that seems appropriate.

Type in the rate as a percent.

You can change these values later to see how different rates and terms affect your costs.

Next, add a row for the number of payments you will make on the loan.

You will pay once a month for the length of your loan term.

To find the number of payments, multiply the number of years in the lease term by 12.

Type “equals” and select the cell with the number of years.

Then, select the asterisk, or multiplication symbol.

Then, type “12” and press enter.

Finally, add a row for “Monthly APR.”

This is the rate of interest you pay per month.

To do this, divide the annual interest rate by 12.

Type “equals,” Select the APR cell; Type “slash” 12 percent; And press Enter.

Now that you have filled in some of the loan terms, continue to the next video to compare loan amounts.

Now, it’s your turn: Freeze 7 rows at the top of your spreadsheet to create a summary table.

Record an annual percentage rate and loan term in years.

Multiply the loan term by 12 to calculate the loan term in months.

Divide the APR by 12 to calculate the monthly percentage rate for your loan.

Next
Instructions
  1. Create rows for annual percentage rate and loan term in years.
  2. Multiply the loan term by 12 to calculate the loan term in months.
  3. Divide the APR by 12 to calculate the monthly percentage rate for your loan.
Attributions
  • "FICO Credit Score Range" by CafeCredit (https://www.flickr.com/photos/cafecredit/27321078025) -- Licensed by CC BY 2.0 (https://creativecommons.org/licenses/by/2.0/) -- Image scaled up, cropping edges
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