Exercises on loans and interest rates
Would you like to get a new bicycle or a new moped? Do you have enough money to take a trip? Often the money in your purse or bank account is not enough for bigger purchases. You can finance your purchases by saving money in advance or by taking out a loan.
How you finance your purchase influences the final price you will have to pay. Saving in advance is usually the most cost-effective way. A loan might be a quick way to make your dreams come true, but the cost of the loan could surprise you. Sometimes taking out a loan is the right thing to do, but not always.
Only an adult, i.e. someone over the age of 18, can take out a bank loan, consumer credit or a quick cash advance (payday loan). Credit eligibility usually requires a regular income.
Now have a look at what different purchases really cost if you take out a loan for them. Use the
loan calculator to help you.
To the exercises.
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Attention! The highest possible annual interest in this loan calculator is 25%; however, many loans have much higher interest. For example, the real interest of a payday loan could be several hundred percent.
The calculator is suited to calculating a fixed instalment; that is, it is based on the assumption that on each due date the debtor pays the same amount of money that consists of the interest and the monthly repayments. The amount of interest and repayments for the total sum may vary. At the start of the loan, the repayments are mostly interest. The capital is paid off in the latter part of the load period.
The calculator assumes that the interest remains the same during the entire loan period. Most bank loans in Finland have a variable interest rate, and the interest varies according to the reference rate of interest. The changes in the reference rate of interest cannot usually be known in advance.
The calculator's calculation model does not take into account all such costs that may occur when taking a loan. The loan calculator is meant for teaching purposes only. Do not make any decisions on loans based on this calculator.
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