When the economy fell apart, this slide show explained the basic economic principles at work and offered up some terms that were appearing in the paper at the time.
2. Credit An arrangement for deferred payment of a loan or purchase 2. A reputation for sound character or quality; standing
3.
4. mortgage A temporary, conditional pledge of property to a creditor as security for performance of an obligation or repayment of a debt.
5. $100,000 loan from the bank…. at 5.0% annual interest…. = $3,333 (principal) + $5,000 (interest) = $8,333 a year Over 30 years that adds up to… = $150,000 total interest TOTAL PAYMENTS= $100,000 + $150,000 = $250,000
6. credit check $8,333a year mortgage payment. 1/4 of your take-home pay. $100,000 mortgage = $33,300 take home pay. Steady income!
7. sub prime credit $200,000 mortgage $16,666 a year mortgage payment. 1/2 of your take-home pay. $200,000 mortgage = $32,300 take home pay.
8.
9.
10.
11. How Interest Works You deposit money in bank. Bank loans money to borrower (company, mortgage, car loan, etc.) Borrower pays back loan, plus interest. Bank pays you interest on deposit.