University:
California State University, Northridge
Course:
FIN 302 | Personal Finance
Academic year:

2022
Views:

68

Pages:

3
Author:

conget2w7

CALCULATE: Impact of Credit Score on Loans For this activity, you’ll need the credit scores you calculated previously in the activity CALCULATE: FICO Credit Scores. If you’ve already completed that activity, copy over the credit scores in the chart below; if not, you’ll need to do that activity now. Use the highest number from their estimated range. Note that Danielle had no credit history, but since that time she’s opened one credit card and made her payments on time. Her current score is 685. 1. NAME SAM JESSICA DANIELLE Estimated Score 575-625 745-795 685 Now, assume that each of the three students has graduated from college, maintained their credit score, secured a $50,000/year job, and now wants to go car shopping. Use the FICO Loan Savings Calculator to determine how much the loan is going to cost Sam, Jessica, and Danielle. Note: This calculator goes down every year in late September-early October. If you are doing this activity during that time frame, use this Car loan calculator to complete the activity instead! Enter the following information into the calculator: A. Type of Loan: 60-month new auto B. State: National C. Loan Principal Amount: $21,000 D. Current FICO Score Range: Varies by person E. Push Calculate 2. Complete the chart below using data from the calculator. NAME SAM JESSICA DANIELLE Estimated Score 575-625 745-795 685 APR (~interest rate) 14.824% 4.093% 7.804% Monthly Payment $498 $388 $424 Total Interest Paid $8,859 $2,258 $4,430 Total Amount Paid $38,739 $22,538 $29,870 3. What is the difference in APR paid by Sam and Jessica? Jessica had about 10% less APR. 4. How does that APR difference impact their monthly payments and total interest? The more APR the higher the interest is. 5. Hypothesize: What if they were buying a car with a $42,000 principal instead? The monthly payments and total interest paid would double. Now, let’s see how Sam’s, Jessica’s, and Danielle’s credit scores would impact a mortgage. This time they’re each trying to finance $250,000 of a condo using a 30-year fixed mortgage. Use the FICO Loan Savings Calculator and enter the following information: Note: This calculator goes down every year in late September-early October. If you are doing this activity during that time frame, use this article and find the section titled “How Credit Scores Affect Mortgage Rates” to complete the chart below. Use $200,000 as the loan amount. A. B. C. D. E. Type of Loan: 30-year Fixed State: National Loan Principal Amount: $250,000 Current FICO Score Range: Varies by person Push Calculate 6. NAME SAM JESSICA DANIELLE Estimated Score 575-625 745-795 685 APR (~interest rate) 6.079% 4.49 % 4.889% Monthly Payment $1,512 $1,265 $1,325 Total Interest Paid $294,175 $205,482 $227,052 Total Amount Paid $838,495 $660,882 $704,052 7. If someone asked you, “Why should I bother worrying about my credit score?” what would you say? It can save you a lot of money on big purchases.

Calculate - Impact of Credit Score on Loans

Related Documents

Description

Related Documents

Want to Download This Document?

Free up your schedule!

Take 5 seconds to unlock