Loan Cost Lab
Understand why every loan can be described by three variables: Principal (how much), APR (at what rate), Term (over how long).
10
Lessons in this module
Principal + APR + term
Understand why every loan can be described by three variables: Principal (how much), APR (at what rate), Term (over how long).
Reading a loan agreement
Understand why four critical agreement elements: (1) Total repayment — the full number, not just monthly, (2) Monthly payment — can you sustain this? (3) All fees — origination, late payment, prepayment penalties, (4) Default consequences — what happens if you cannot pay? These four determine true cost and risk.
Amortisation explained
Understand why early extra payments have compound effect.
Secured vs unsecured loans
Understand why the secured loan trade-off: lower rate (benefit) vs collateral forfeiture risk on default (cost).
Total cost of borrowing
Understand why 'Only 8,000 in local currency per month' feels affordable.
The 28/36 rule
Understand why the 28/36 rule is a debt stress buffer.
Debt-to-income ratio
Understand why dTI is a capacity indicator.
When NOT to borrow
Understand why avoid borrowing for: (1) wants you could save for (patience is cheaper), (2) rapidly depreciating items (paying interest for declining assets), (3) normal living expenses (debt masking unaffordability), (4) when already over-leveraged (compounding stress).
Negotiating interest rates
Understand why negotiating power comes from demonstrating low lender risk: (1) high credit score = proven reliability, (2) long relationship = switching cost for the bank, (3) competing offers = they will lose your business, (4) stable income = repayment certainty.
Nigerian loan app traps
Understand why some unscrupulous loan apps (not all) have accessed borrowers' contacts and sent shame messages or harassment to family and colleagues.
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