COMMERCE 4FP3 Chapter Notes - Chapter 6: Real Interest Rate, Loan Guarantee, Disability Insurance
23 Jan 2017
School
Department
Course
Professor
Document Summary
Annual percentage rate (apr): the yearly interest rate quoted by a financial institution on a loan; the apr may be compounded more frequently than once a year, in which case the ear > apr. Longer pay period: installment loan (due to low interest rate) Shorter pay period: credit card (due to grace period) *in addition to mortgage and car loans: inexpensive loans. Typical source: parents or family members; charge no or very little interest. To avoid income attribution rules, family members should charge a rate than the cra"s prescribed rate, set quarterly. Other examples include money borrowed to finance gics, the cash value of a whole life insurance policy, or loans from major automakers; interest rate = 4 . Buy a loan, buy a gic or whole life insurance policy with the loan, pay off the loan, obtain the gic or cash value of the whole life insurance policy: medium-priced loans. Advantage: credit unions are sympathetic towards people with payment.
