Lesson 10: Features of borrowing
Introduction
Time:
- Single class period
Materials:
Activity One: True or False post-its
- Red post-its
- Green post-its
- Teacher Resource Sheet: True or False
Homework Task:
Useful Links:
- www.ccpc.ie/consumers/money/loans/
- www.ccpc.ie/consumers/financial-comparisons/student-loan-comparison/
Introduction:
As we’ve seen, most people will borrow at some stage of their lives. It is worth taking time to research and to shop around for the best deal when looking for a loan. In this lesson, students will become familiar with some of the common features of borrowing from financial institutions.
Step-By-Step Instructions
Activity One: True/False post-it notes
1. Give one red and one green post-it note to each student.
2. Explain to the class that you are going to read out a series of statements and they must decide whether these statements are ‘True’ or ‘False’. If they think a statement is ‘True’ they hold up the green post-it note. If they think a statement is ‘False’ they hold up the red post-it note. Students will be asked to explain their reasons for thinking each statement is ‘True’ or ‘False’.
Everyone is free to change their minds and hold up a different post-it note in response to evidence from fellow students. Count the numbers of ‘True’ and ‘False’ post-its for each statement and keep a tally on the white/blackboard.
3. Read each of the following statements aloud, allowing time for students to consider their response:
- Everyone can apply for a loan
- There is no difference between different types of lenders
- Saving for something is more cost effective than borrowing to pay for it
- You should pay off your credit card bill in full each month
- If a parent supports their child when they apply for a loan (i.e. acts as guarantor) they have to pay back the loan if their child doesn’t/can’t
- If you miss one loan repayment it is fine
- There is help for people who find that they are unable to repay their loans
4. Ask the class to reflect on some of the issues raised. What statements were the majority agreed upon? What divided the class? Did they change their minds at any stage? What evidence or information helped them to change their minds?
5. Read aloud the information presented on the Teacher Resource Sheet: True or False.
6. Compare and discuss the tally of student responses with the information on the Resource Sheet.
Homework Task
Ask students to imagine that they have an older sister, Elaine, who is looking for help to shop around for a loan.
Elaine is a student at university and needs to borrow €750 to pay for a new computer. She works part-time in an office and has been promised three months full-time employment in the same place this summer so she knows that she can pay the loan off fairly quickly, probably within a year. That being said she is really keen to get the best deal possible and keep the amount charged on the loan to the minimum.
Explain to students the term ‘Annual Percentage Rate’ (APR) – this is the amount that Elaine will be charged on her loan, taking into account all of the interest and fees. When comparing loans of the same amount and term, the lower the APR the less Elaine will have to pay back.
Invite students to go to the CCPC’s website (www.ccpc.ie/consumers) and follow the links: Financial Comparisons – Student Loans (www.ccpc.ie/consumers/financial-comparisons/student-loan-comparison/). Under the heading of ‘Search for Student Loans’ they should enter the amount of €750 and indicate that the loan will be repaid over the period of one year, then press Search.
When the results are displayed they should choose to compare at least two different loans and use the information displayed to complete Student Worksheet: Loan calculation.
The steps for reviewing this homework task are given at the start of Lesson 11.
