MCS 2100 Chapter Notes - Chapter 6: Student Loans In Canada, Annual Percentage Rate, Effective Interest Rate
19 Mar 2015
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Chapter 6: choosing a source of credit: the costs of credit. What kind of loan should you seek: two types of credit exist: consumer loans and revolving credit. Diners/en route) usually requires full payment of the balance due each month, does not impose a finance charge. Interest charged is lower as the rates are subsidized by the federal government; don"t have to repay until you finish your education: cannot have these loans cancelled, didn"t get a job, or because you are in financial difficulty. Tackling the trade-offs: when you choose your financing, there are trade-offs between the features you prefer (term, size of payments, fixed or variable interest or payment plan) and the cost of your loan. Floating-rate personal line of credit: lines of credit usually charge a variable interest rate tied to the lender"s prime rate. Interest is compounded daily: borrowers are often required to repay a minimum of 3-5% of the outstanding loan balance on a periodic basis.
