Buying on terms and credit

Find the total cost of buying on terms and compare credit options to determine the cheapest way to finance a purchase.

Worked examples

Finding the total cost of a terms arrangement

Straightforward

Problem

A sofa has a cash price of

\$1400

. It can be purchased on terms with a deposit of

\$200

and 18 monthly repayments of

\$75

. Find the total amount paid under the terms arrangement.

Expressing the interest cost as a percentage of the cash price

Moderate

Problem

A dishwasher has a cash price of

\$1200

. Buying on terms costs a deposit of

\$240

and 12 monthly repayments of

\$90

. Find the interest paid and express it as a percentage of the cash price.

Comparing two credit options to find the cheaper deal

Challenging

Problem

A gaming console has a cash price of

\$600

. Option A is a buy-now-pay-later arrangement with a flat fee of

\$30

and the full balance split into 4 equal fortnightly payments. Option B is buying on terms with a deposit of

\$100

and 10 monthly repayments of

\$58

. Find the total cost of each option and determine which is cheaper and by how much.

Practise

Q1·Straightforward

A laptop can be purchased on terms with a deposit of

\$200

and 24 monthly repayments of

\$45

. Find the total amount paid under the terms arrangement.

Q2·Straightforward

A television is advertised with no deposit and 36 weekly repayments of

\$18

. Find the total amount paid.

Q3·Straightforward

A washing machine can be purchased with a deposit of

\$100

and 12 monthly repayments of

\$78

. Find the total amount paid under the terms arrangement.

Q4·Straightforward

A bicycle with a cash price of

\$650

can be purchased on terms with a deposit of

\$50

and 20 monthly repayments of

\$35

. Find the total amount paid under the terms arrangement.

Q5·Moderate

A refrigerator has a cash price of

\$900

. Buying on terms requires a deposit of

\$180

and 12 monthly repayments of

\$66

. Find the interest paid as a percentage of the cash price.

Q6·Moderate

A camera has a cash price of

\$750

. Buying on terms costs a deposit of

\$150

and 18 monthly repayments of

\$40

. Find the interest paid as a percentage of the cash price.

Q7·Moderate

A motorbike has a cash price of

\$3000

. Buying on terms requires a deposit of

\$600

and 36 monthly repayments of

\$75

. Find the interest paid as a percentage of the cash price.

Q8·Moderate

A computer desk has a cash price of

\$800

. It can be purchased with no deposit and 15 monthly repayments of

\$64

. Find the interest paid as a percentage of the cash price.

Q9·Challenging

A laptop has a cash price of

\$2400

. Option A is a buy-now-pay-later arrangement with a flat account fee of

\$96

and the full balance split into 8 equal fortnightly payments. Option B is buying on terms with a deposit of

\$400

and 24 monthly repayments of

\$90

. Find the total cost of each option, then calculate how much cheaper Option A is than Option B.

Q10·Challenging

A television has a cash price of

\$1500

. Option A is a buy-now-pay-later service that charges a flat fee of

\$45

and splits the full balance into 4 equal fortnightly payments. Option B is buying on terms with a deposit of

\$150

and 18 monthly repayments of

\$80

. By how much is Option A cheaper than Option B?

Q11·Challenging

A home appliance has a cash price of

\$2800

. Option A is a personal loan for the full

\$2800

8\%

p.a. simple interest, repaid in full after

1

year. Option B is buying on terms with a deposit of

\$400

and 36 monthly repayments of

\$75

. By how much is Option A cheaper than Option B?

Q12·Challenging

A gaming setup has a cash price of

\$960

. Option A is a buy-now-pay-later arrangement with a flat fee of

\$40

and the full balance split into 4 equal fortnightly payments. Option B is buying on terms with a deposit of

\$160

and 12 monthly repayments of

\$78

. By how much is Option A cheaper than Option B?