Description
I’m doing an assignment and I need help with that. My assignment is:
Your credit score impacts the interest rate on loans. Let’s look at how interest affects the overall price you pay after your loan is completely paid off. For example, if you borrow $100 with a 5% interest rate, you will pay $105 dollars back to the lender you borrowed from. The lender will make $5 in profit. Let’s say your credit score is excellent and you can secure an interest rate of 2% on the same $100 loan, you save $3. Now that we have covered the theory, let’s look at the same principle applied to a car loan.
The car price of $22,500 on a 5-year loan at 5% versus 1.9%.
The 5% loan would cost you $25,701.17 in total—$2,976.17 interest.
The 1.9% loan would cost you $23,243.48 in total—$518.48 interest.
As you can see, a better credit score (resulting in a lower loan rate) would save you $2,457.69. Check out this video to learn more about interest rates:
Questions:
Use the video and the information above to answer the following questions in a Word document:
How are interest rates and credit scores related?
What are three things you can do to influence a credit score?
Interest rates can cost you money. Provide an example. Interest rates can also make you money. Provide an example.
Word count: 500 words
No AI. No plagiarism.
