Calculating loan payments

Updated Jun 30, 2022

Using a case study, students explore how the amount borrowed, interest rates, and the term of a loan can increase or decrease the amount of loan payments.

Big idea

The amount of an installment loan payment amount is the result of several factors.

Essential questions

How do principal, interest rate, and loan term affect loan payments?
What criteria do you use to compare loan offers to get the best deal?

Objectives

Make informed choices about credit offers
Calculate monthly payments for loans based on principal, interest rate, and loan term

What students will do

Calculate and analyze how monthly payments on a loan change based on the principal, interest rate, and term.
Compare borrowing options to identify the best deal.
Reflect on ways to reduce the amount owed on a loan.

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Teacher guide

cfpb_building_block_activities_calculating-loan-payments_guide.pdf

Student materials

cfpb_building_block_activities_calculating-loan-payments_worksheet.pdf

Note: Please remember to consider your students’ accommodations and special needs to ensure that all students are able to participate in a meaningful way.

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Key information for this activity

Building block

(What are the building blocks?)

Executive function
Financial knowledge and decision-making skills

Topic

Borrow (Getting loans, Managing credit)

School subject

CTE (Career and technical education), Math

Audience

Grade level: High school (9-10), High school (11-12)

Age range: 13-15, 16-19

Student characteristics: Low income, Rural, Urban

Activity characteristics

Activity type: Individual, Small group

Teaching strategy: Cooperative learning, Simulation

Bloom’s Taxonomy level: Apply

Activity duration: 75-90 minutes

National standards

(What are the national standards? )

Standards: V. Managing credit

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