Loans: Auto, Student, and the Total Cost of Borrowing
Aligned to JS:CD-4 — Jump$tart National Standards in K-12 Personal Finance Education & Advance CTE Career Clusters.
What this lesson teaches
A loan has four numbers that decide everything: the amount, the rate, the term, and the monthly payment. Lengthening the term lowers the payment and raises the total cost. The number that matters is total paid, which lenders rarely lead with.
Worked examples
Example 1
$20,000 at 7% over 4 years is about $479/month and $22,980 total. The same loan over 7 years is about $302/month but $25,370 total — $2,390 more for the same car.
Example 2
Federal student loans have fixed rates and income-driven repayment options; private loans usually have neither. That difference matters more than a slightly lower advertised rate.
Example 3
A loan is not free just because the payment fits. Ask what the total will be by the end before you sign anything.
Practice questions
- For a loan, list the four numbers you must know before signing.
- Why does a longer term cost more even though payments are smaller?
- Name one important difference between federal and private student loans.
Watch the lesson
Every lesson comes with a video taught in English and Spanish — the same video the QR code in the printed workbook opens.
▶ Watch this lessonEn español
Préstamos: de auto, estudiantiles y el costo total de pedir prestado
Un préstamo tiene cuatro números que lo deciden todo: el monto, la tasa, el plazo y el pago mensual. Alargar el plazo baja el pago y sube el costo total. El número que importa es el total pagado, y los prestamistas rara vez empiezan por ahí.
Ejemplo 1: $20,000 al 7% a 4 años son unos $479 al mes y $22,980 en total. El mismo préstamo a 7 años son unos $302 al mes pero $25,370 en total — $2,390 más por el mismo coche.
Ejemplo 2: Los préstamos estudiantiles federales tienen tasa fija y opciones de pago según el ingreso; los privados normalmente no tienen ninguna de las dos. Esa diferencia importa más que una tasa anunciada un poco menor.
Ejemplo 3: Un préstamo no es gratis solo porque el pago te quepa. Pregunta cuál será el total al final antes de firmar nada.
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