Personal Project Proposal: Understanding Personal Loan Repayment
Personal Project Proposal: Understanding Personal Loan Repayment
Personal finance is an area of major concern for individuals, especially as it regards responsible borrowing. The following project will work to define personal finance issues, specifically regarding the repayment of personal loans. Personal finances can be managed by using formulas and charts to determine the repayment schedule for, and calculate the cost of various repayment plans for personal loans.
Application of Mathematical Concepts
A variety of mathematical concepts can be used to understand, calculate, and compare approaches to personal loans. An algebraic formula can be created to calculate the cost of interest for various repayment plans, statistics can be used to compare the relationship between average monthly payment and length of repayment, and a line graph can be used to demonstrate the relationship between repayment and debt over time.
Research
Research indicates that states have neglected their responsibility to educate the young about matters concerning their personal finances (Prah, 2014). This has resulted in a poor concept of money management for the young, especially as it relates to responsible borrowing and repayment. As a result, there is a high needs to create systems for borrowers to understand their options and the consequences of different repayment structures, and to make informed choices, based on an understanding of their options (Prah, 2014). One excellent example of these kinds of tools is available form Bank Rate (2016), which provides a loan comparison calculator for this purpose. However, this fails to provide the visual comparison on charts and graphs that is represented by my project.
Reflection
This can provide a thorough understanding, for new borrowers of how shorter term loans, or loans with lower interest rate reduce total payment over time. I can use the concept of line graphs and comparative statistics from our class to support the work. It is needed, for example, in cases where a person must choose between a 3-year and a 5-year car loan, but needs to know and understand the difference that the two loan terms will make on both their monthly payment and their total repayment.
References:
Bank Rate. (2016). Loan Comparison Calculator. Available from http://www.bankrate.com/calculators/home-equity/compare-loans-calculator.aspx
Prah, P. (2014). States lag in educating students about personal finance. Stateline. The Per Trust. Available at http://www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2014/03/04/states-lag-in-educating-students-about-personal-finance
