The big ideaBig loans are long plans: a car, a home or school, each with its own shape.
How it works
A big loan works like a small one, with a size, a plan and an extra price, but it runs longer. In Lantern Bay, Tilda borrowed 12 coins for a car, the Orla family 60 for a cottage and Mira 24 for school.
Pay arrives a little at a time, so bigger things need longer plans: two years for the car at 6 a year, four for school at 6 a year, six for the cottage at 10 a year.
A car wears out a little each year, which is why car loans are usually the shortest.
A claim lets the lender take the car or cottage back if payments stop for a long time, but most lenders would rather make a new plan, so talk early. A school loan has no claim, because learning cannot be handed back.
How much each neighbor borrowed.Four questions before any big loan.
🚗car loan🏠home loan🎓school loan
Three big loans.
Example 1: The car loan
Tilda borrows 12 coins and pays 6 a year.
12 ÷ 6 = 2, so it takes two years.
A car wears out, so the plan is the shortest.
Example 2: The home loan
The Orlas borrow 60 coins and pay 10 a year.
60 ÷ 10 = 6, so it takes six years.
A home costs the most, so its plan is the longest.
Example 3: The school loan
Mira borrows 24 coins and pays 6 a year.
24 ÷ 6 = 4, so it takes four years.
Her loan has no claim, because learning cannot be handed back.
Example 4: If a payment will be late
A careful borrower asks: what if I am late?
Tell the lender early.
Most lenders would rather make a new plan.
Words to know
claim
The lender's right to take something back if payments stop for a long time.
plan
How much you pay a year, and for how long.
lender
The one who lends the coins, like Bea.
extra price
What a loan costs on top of the coins borrowed.
Watch out
A claim does not mean the lender takes things at once. It is only if payments stop for a long time.
A hope is not a promise. Mira hoped boat building would pay well, but nobody can promise it.
Homes often keep their worth over the years, but nobody can promise it.
Real plans run longer than these, but the order is the same.
Try it
Mira pays 6 a year on her 24-coin loan. After 2 years, how much has she paid?
Which of the three loans takes the longest?
Why are car loans usually the shortest?
Does a school loan have a claim?
Answers: 1. 12 · 2. The home loan · 3. A car wears out a little each year · 4. No
Try at homeWith a grown-up, talk about something big your family planned for, like a trip or a move. How did you plan, and how long did it take?
For grown-upsA made-up village and pretend coins. Ask your child to say the four questions before any big loan: how much, how long, what extra, and what if I am late? This is an idea, not advice about any real loan.
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