Objectives:
Define loans and interest, and explain the basic concepts behind borrowing and lending money
Explain how loans are repaid with interest, and calculate the total amount of repayment for a given loan amount and interest rate
Analyze the risks and benefits of taking out loans, and identify different types of loans and their purposes
Materials:
Whiteboard and markers
Handouts on loans and interest (including definitions, examples, and calculations)
Calculator
Video clip from Game of Thrones titled (Season 4, Episode 6). Link here.
Procedures:
Introduction (10 minutes)
- Begin by asking students if they have ever borrowed or lent money before. What was the purpose of the loan? Was interest involved? What was the experience like?
- Introduce the concept of loans and interest and explain how they work together. Loans are when someone borrows money from another person or institution (such as a bank) and agrees to pay it back with interest over time. Interest is the cost of borrowing money, usually expressed as a percentage of the loan amount.
- Show the clip “Tyrion Explains how Loans Work”. Link here.
Instruction (15 minutes)
- Define key terms related to loans and interest, such as principal, interest rate, term, and repayment schedule.
- Explain how interest rates are set based on factors such as the borrower’s creditworthiness, the type of loan, and the overall economic climate.
- Use examples to illustrate how loans are repaid over time, and how interest accumulates over the life of the loan.
Application (30 minutes)
- Ask students to work in pairs to come up with real-world scenarios where loans might be necessary (such as buying a car, starting a business, or paying for college), and to calculate the total amount of repayment based on different interest rates and repayment schedules.
- Refer to the scene in “The Game of Thrones” where Tyrion Lannister teaches Bronn about interest payments on loans. Discuss the context of the scene and how it illustrates the importance of understanding loans and interest in the real world.
Discussion and Reflection (15 minutes)
- Lead a class discussion on the risks and benefits of taking out loans. What are some advantages of borrowing money? What are some potential pitfalls to watch out for? How can students make informed decisions about when and how to take out loans?
- Have students reflect on what they have learned about loans and interest, and how they might apply this knowledge in their own lives.
Conclusion (5 minutes)
- Summarize the key concepts covered in the lesson, and remind students of the importance of understanding loans and interest in the real world.
- Encourage students to continue learning about personal finance and to seek out resources and advice as needed.