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Lesson details
Key learning points
- In this lesson, we will learn about how payday loans work. We will investigate the risks involved in high interest loans and calculate regular repayment plans including comparing total repayment costs to original loan amounts.
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5 Questions
Q1.
If you saved £300 a month, how long would it take you to save £9,600?
3.2 years
32 years
96 months
Q2.
Simple interest is the interest that accrues upon the initial amount borrowed (or saved), and the interest, as times goes on.
True
Q3.
Compound interest is the interest that accrues upon the initial amount borrowed. It is a fixed sum every year (or other time period).
True
Q4.
If I saved £5,000 with Oak National Bank at a compound interest rate of 7% for 9 years, how much would I have, rounded to the nearest penny, at the end of the 9 years?
£8,125.00
£9,192.29
£9835.27
Q5.
When you save money, you want a low interest rate.
True
5 Questions
Q1.
A payday loan is defined as a small amount of money usually borrowed for a short period of time that is typically paid back when someone receives their next form of income. They often have very high levels of interest attached to them.
False
Q2.
If you borrowed £100 at 4% compound interest for 5 years, assuming no repayments, how much would you owe at the end of the term? Round to the nearest penny.
£104.00
£120.00
£121.55
Q3.
If you borrowed £125 at an interest rate of 1,800% for 5 years, assuming no repayments, how much would you owe at the end of the term? Round to the nearest pound.
£1,125,000
£236,196,000
£25,042
Q4.
If you borrowed £125 at an interest rate of 1,800% for 7 weeks, assuming no repayments, how much would you owe at the end of the term? Round to the nearest penny.
£111,753,967,375.00
£111,753,967,375.01
£185.81
Q5.
A payday loan is a cheaper option for finance than a credit card.
True