Payday Loans

Maths

Finance

A payday loan is defined as a small amount of money usually borrowed for a short period of time that is typically paid back when someone receives their next form of income. They often have very high levels of interest attached to them.

If you borrowed £100 at 4% compound interest for 5 years, assuming no repayments, how much would you owe at the end of the term? Round to the nearest penny.

If you borrowed £125 at an interest rate of 1,800% for 5 years, assuming no repayments, how much would you owe at the end of the term? Round to the nearest pound.

If you borrowed £125 at an interest rate of 1,800% for 7 weeks, assuming no repayments, how much would you owe at the end of the term? Round to the nearest penny.

A payday loan is a cheaper option for finance than a credit card.

If you saved £300 a month, how long would it take you to save £9,600?

Simple interest is the interest that accrues upon the initial amount borrowed (or saved), and the interest, as times goes on.

Compound interest is the interest that accrues upon the initial amount borrowed. It is a fixed sum every year (or other time period).

If I saved £5,000 with Oak National Bank at a compound interest rate of 7% for 9 years, how much would I have, rounded to the nearest penny, at the end of the 9 years?

When you save money, you want a low interest rate.

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Payday Loans

Lesson outcome