Loans Webquest

Use the websites indicated to answer the questions about car loans and student loans.
Car Loans
http://www.personalfinance.duke.edu/make-todays-decisions/transportation/what-are-ins-andouts-car-loans
1. How are car loans generally paid off? They are paid off through monthly payments.
2. What other factors must be considered besides the monthly payment for your car loan when
determining if a car is affordable? You must consider interest rates and dealers terms which
can include special offers that raise prices.
3. Define the following terms:
a. APR: annual percentage rate you will pay on the money you borrow
b. Down Payment: the money that is given at the time when the consumer decides to
definitely buy the product; the more you pay for the down payment, the less interest
you will accumulate
c. Additional Finance Charges: additional fees for originating a loan
d. Loan Term: the time during which a loan is in place
e. Prepayment Penalty: fee for paying off a loan early
4. How does your credit score affect your APR? The lower your credit score, the higher your APR
will be.
5. What are 3 lenders you could finance your car through? Teachers Federal Credit Union,
LightStream (SunTrust Bank), Chase Bank
6. What does the dealer keep until the loan is paid off? Credit Insurance
7. How can you make the process of paying off your car easier? Allow your bank to automatically
transfer funds from another account each month to pay off monthly payment.
http://www.consumerreports.org/cro/2012/12/how-to-get-the-best-car-loan/index.htm
1. What should you focus on when comparing auto loans? Focus on the annual percentage rate
which fluctuates.
2. Explain the relationship between loan terms, monthly payments, and payments overall. A
shorter term means higher monthly payments but less money paid overall.
3. How much should a down-payment be? 20%
4. What website should you use to search for car loan rates? www.bankrate.com
5. Why are local banks in a position to offer competitive loan rates? They only cater to those
with better credit scores.
6. Why are credit unions able to offer competitive loan rates? They loan money only to their
members who each technically own the credit union.
Student Loans
http://www2.ed.gov/offices/OSFAP/DirectLoan/student.html
1. What are Direct Loans? Low interest loans that help students and parents pay for education
beyond high school.
2. What are 3 things you can do with Direct Loans? Borrow directly from the federal government,
have access to all loan information online, and choose from many different repayment plans.
3. How do you apply for Direct Loans? You must apply through the FAFSA.
4. Define the following in your own words:
a. Subsidized Loan government pays the interest so student can focus on school
b. Unsubsidized Loan interest is added to the balance while student is in school
c. PLUS Loan loan offered to parents of students in higher education
d. Consolidation Loan combines multiple federal education loans into one large laon

5. What are the current interest rates? Direct Subsidized and Unsubsidized Loans for
undergraduates with a first disbursement date between July 1, 2014, and June 30, 2015:
4.66% ; Direct Unsubsidized Loans for graduate students: 6.21% ; Direct PLUS Loans:7.21%
6. What is the maximum amount you can borrow in your first year of college in a Direct Stafford
Loan? $5,500
7. While youre at school, what can you use Direct Loan money for? Tuition, room and board,
fees and indirect expenses such as books, supplies, equipment, dependent child care
expenses, transportation and rental or purchase of a personal computer
8. Once you graduate, how long is the grace period in which you are not required to make loan
payments? 6 months
9. What is the name of the payment plan that most students repay their loans with? Standard
Repayment
10.What can you do if you have multiple federal education loans to make repayment easier? You
can consolidate your federal loans.
11.How many years do you generally have to repay your student loans? Usually 10 to 25 years
12.What does EDA stand for and how does it work? Electronic Debit Account: bank automatically
makes monthly loan payments
13.What are 3 options to choose from if youre having trouble making payments on your student
loans? 1. Change repayment plan, 2. Deferment, 3. Forbearance
14.What are 2 consequences of going into default on your loans? 1. Immediately pay entire
unpaid amount, 2. Lose eligibility for loan deferment
http://www.pnconcampus.com/
1. What are the eligibility requirements for PNC private student loans (undergraduate)? You must
be an undergraduate student in a degree program, be enrolled at least half time as
determined by your school, be U.S. citizens or permanent residents, have lived in the U.S. for
the previous two years, and meet the credit guidelines.
2. How long can you take to repay private student loans at PNC? 15 years
3. What does it mean to have your payments deferred? Temporarily stop payment until you are
in a stable situation in which you can begin paying again
4. What are the current interest rates (APRs)? Variable: 3.47% to 10.42% ; Fixed: 6.49% to
12.99%
http://www.pnconcampus.com/learningcenter/planningforcollege/whatisfinancialaid/altloansorfed
plus.html
1. What are Federal Parent Loans for Undergraduate Students? Loan offered to parents of
dependent college students; they can take up to the maximum tuition amount minus the
financial aid
2. What are private loans? Loans offered to credit worthy students who wish to pay their tuition
3. Complete the chart below, then answer: Which loan would be best for you AND WHY?
Consider whether you think you will qualify for federal student aid or if your parents will help
you pay for school when writing your answer.
The Federal Direct PLUS loan might be the best loan for me simply because my parents have
always valued my education and wish to pay part of my college tuition. However, if I am at a
monetary state where I would prefer to pay the majority, then the Federal Direct Stafford Loan
would be best because it has better interest rates than the bank loan.

Borrower

Federal Direct
Stafford Loans
Student

Lender

U.S. Government

Federal Direct PLUS

Loan
Dependent students
parents
U.S. Government

PNC Solution Loan

Student
PNC Bank

Annual Loan Limit

$5,500/$12,500
undergrad
$20,500
grad

100% tuition minus

financial aid

Undergraduates:
$40,000
Graduate Students:
$65,000

Interest Rate

4.66% undergrad
6.21% grad

7.21%

Discount for
Automated
Payments
Payment
Deferment

.25%

.25%

Fixed : 6.49% to
12.99% Variable:
3.30% to 10.25%
0.5%

No payment until 6
months after
graduation

No payment until 6
months after
graduation

Repayment Loans

10-25 years

10-25 years

FAFSA Required?

yes

yes

no

Credit Check
Required?

No

Yes

Yes

Co-Signer
Required?

No

If you have adverse

credit history

No unless borrower is
under 17

Satisfactory
Academic
Progress
Required?

yes

yes

no

No payment until 6
months after
graduation/ can pay
interest only while in
school
15 years standard
payment