#0352 – Understanding Interest Rates, - Ang, mater, ESL Podcast McQuillan Jeff mp3+PDF

#0352 – Understanding Interest ...

#0352 – Understanding Interest Rates, - Ang, mater, ESL Podcast McQuillan Jeff mp3+PDF

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English as a Second Language Podcast
www.eslpod.com
ESL Podcast 352 – Understanding Interest Rates
GLOSSARY
interest rate –
the percentage of extra money that has to be paid back when one
borrows money from a bank or other financial institution
* As interest rates rise, people become less able to borrow money.
mortgage –
a loan used to buy a home; money that is borrowed to buy a home
* They took out a $300,000 mortgage to buy a very nice home.
in general terms –
generally; broadly; not specifically; not in detail; overall
* In general terms, it is easier for tall players to get on this basketball team than
shorter players.
to borrow –
to ask for and receive money from a bank or person, agreeing to
pay back that money, plus extra (interest) in a specific period of time
* The Hagstroms want to borrow $7,500 to buy a new car.
to calculate –
to use numbers and mathematical operations (add, subtract,
multiply, divide, etc.) to find the total amount of something
* Your weight in pounds is calculated by multiplying your weight in kilos by 2.2.
annual rate –
the percentage by which something changes in one year
* Sales are growing at an annual rate of 19%.
percent –
per 100; a number that is divided by 100; a number with a percentage
sign (%) after it
* - What percent of 50 is 30?
- It’s sixty percent (60%).
monthly payment –
the amount of money that must be paid at the same time
each month
* Tricia makes three monthly payments: $975 for rent, $90 for phone and
Internet, and $50 for her gym membership.
term –
duration; the amount of time that a loan or agreement is valid
* Most home loans have a 30-year term.
principal –
the amount of money that is borrowed; money owed that does not
include the interest
* Each month they pay off a little bit of their principal, but most of the payment is
used for interest.
1
These materials are copyrighted by the Center for Educational Development (2008). Posting of
these materials on another website or distributing them in any way is prohibited.
English as a Second Language Podcast
www.eslpod.com
ESL Podcast 352 – Understanding Interest Rates
lender –
an institution or person that lends money to people; an institution or
person from whom money is borrowed
* In this town, three lenders specialize in making small business loans.
to assess –
to charge and collect an amount of money
* If you don’t return your books on time, the library will assess a late fee of $1 per
day per book.
to process –
to handle a document officially; to make sure that an application or
other type of document is reviewed and approved appropriately
* The university processes thousands of student applications each year.
the fine print –
the small writing at the end of a contract that is difficult to read
and often includes or hides many important details
* When they read the fine print, they were shocked to learn that they would have
to pay $300 to cancel their contract with the cell phone company.
to go down that road –
to make a decision to do something and then do it; to do
something in a particular way when one has other choices
* Guillermo bought an old car that didn’t work very well. The next time he
needed to buy a car, he said, “I’ll never go down that road again! From now on,
I’m buying only new cars.”
to default –
to not make a payment that one is supposed to make, especially on
a loan
* When they defaulted on their loan for four months in a row, the bank took away
their house.
credit score –
a number on a report that shows how much money one owes to
other people and businesses, and whether one makes payments on time
* If you pay your credit card bills on time, you should have a good credit score.
course of action –
a plan for what one should or will do; what one plans to do
* I think the best course of action is for us to wait quietly and see what happens
next.
2
These materials are copyrighted by the Center for Educational Development (2008). Posting of
these materials on another website or distributing them in any way is prohibited.
English as a Second Language Podcast
www.eslpod.com
ESL Podcast 352 – Understanding Interest Rates
COMPREHENSION QUESTIONS
1. Which of these is not part of a monthly loan payment?
a) The fine print.
b) The principal.
c) The interest.
2. According to Oscar, how might Kerry ruin her credit score?
a) By going down the wrong road and getting lost.
b) By not making payments when she is supposed to.
c) By not knowing how to calculate her annual rate.
______________
WHAT ELSE DOES IT MEAN?
term
The word “term,” in this podcast, means duration, or the amount of time that a
loan or agreement is valid: “Their apartment rental agreement has a one-year
term.” A “term” is also the amount of time that a politician works in a particular
job before he or she has to be re-elected: “The U.S. president can serve a
maximum of two four-year terms.” When talking about academics, a “term” is
one of the four periods of the school year: “He did very poorly in the fall term, but
his grades improved in the winter and spring terms, so he won’t have to take
extra classes during the summer term.” Finally, a “term” is a technical word that
has a specific meaning: “The word ‘hypertension’ is a medical term that is used
to talk about high blood pressure.”
to default
In this podcast, the verb “to default” means to not make a payment that one is
supposed to make, especially on a loan: “When he lost his job, he defaulted on
his car payment.” In a computer program, the “default” is what happens
automatically when one does not make any changes or special choices: “The
default printer paper is 8.5 x 11 inches.” The phrase “by default” means that
something happens because one hasn’t made any changes or special choices:
“By default, the computer will save your file every five minutes.” The phrase “by
default” is also used when one wins something without any competition: “The
other team didn’t show up for the game on Saturday, so we won by default.”
3
These materials are copyrighted by the Center for Educational Development (2008). Posting of
these materials on another website or distributing them in any way is prohibited.
English as a Second Language Podcast
www.eslpod.com
ESL Podcast 352 – Understanding Interest Rates
CULTURE NOTE
When people want to borrow money from a bank, they often have to “put up”
(offer or provide) “collateral,” which is something that they agree to give to the
bank if they are unable to pay back the loan. Common types of collateral include
homes, cars, small businesses, valuable artwork, and more. The bank
“assesses” (evaluates) the “value” (how much something can be sold for) of the
collateral and then decides how much money it can lend to a particular borrower.
Unfortunately, sometimes people are unable to pay back their loans. This often
happens if they lose their job or if they have high medical expenses. When a
person defaults on a monthly payment for the first time, the bank usually asks
what happened and tries to “make arrangements” (make plans for something to
happen) so that the money is paid as soon as possible.
However, if a borrower defaults on a loan for several months “in a row”
(consecutively, or one after another), then the bank may “repossess” the loan’s
collateral or the thing that was purchased with loan money. For example, a
borrower who “takes out” (borrows) a car loan and then isn’t able to make the
monthly payments will usually have his or her car “repossessed,” meaning that
the bank becomes the new legal owner of the car.
When a bank repossesses a home, it is known as a “foreclosure.” The
foreclosed “property” (a building and the land it is on) is then owned by the bank.
Banks don’t really want to own homes, so they usually try to sell their foreclosed
properties to “recover” (get back) the money they lost on the loan.
______________
Comprehension Questions Correct Answers: 1 – a; 2 – b
4
These materials are copyrighted by the Center for Educational Development (2008). Posting of
these materials on another website or distributing them in any way is prohibited.
English as a Second Language Podcast
www.eslpod.com
ESL Podcast 352 – Understanding Interest Rates
COMPLETE TRANSCRIPT
Welcome to English as a Second Language Podcast number 352: Understanding
Interest Rates.
This is English as a Second Language Podcast episode 352. I’m your host, Dr.
Jeff McQuillan, coming to you from the Center for Educational Development in
beautiful Los Angeles, California.
Our website is eslpod.com. On it, you can find a Learning Guide for this episode,
an 8 to 10 page PDF file that contains all of the vocabulary, definitions, new
sample sentences, additional definitions, comprehension questions, cultural
notes, and a complete transcript of this episode.
This episode is called “Understanding Interest Rates.” It’s a dialogue between
Kerry and Oscar about borrowing money from a bank. Let’s get started.
[start of dialogue]
Kerry: I need to take out a small business loan and I’m trying to figure out what
the interest rate would be. Do you understand this stuff?
Oscar: If it’s the same as a mortgage loan, then I think I understand it in general
terms. The interest rate would be the percentage of the amount you plan to
borrow. It’s usually calculated as an annual rate. So, for instance, a 10 percent
interest rate on $100 would be $10 a year.
Kerry: Okay, I see, but how is my monthly payment calculated?
Oscar: As the borrower, your monthly payment depends on the term of your
loan. Each month, you’ll pay money toward the principal, plus the interest you
owe the lender. The bank may also assess other fees for processing your loan,
so make sure to read the fine print.
Kerry: Thanks. I understand it a little better now.
Oscar: Are you sure you want to go down that road? You don’t want to default
on your loan and ruin your credit score. Maybe there are other options.
Kerry: Maybe there are, but I just don’t see any right now. I have an
appointment with an accountant next week and hopefully she can advise me on
the best course of action.
5
These materials are copyrighted by the Center for Educational Development (2008). Posting of
these materials on another website or distributing them in any way is prohibited.
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