The how loans work lecture is a critical component for your ability to accumulate a net worth of $1M+ in your lifetime. I tell my in class finance students to avoid interest and to that I buy bank stocks. The reason is most people do not avoid interest and banks make a lot money due to that decision.

You will take a mortgage for $200,000 at 4.5% interest for a 30 year loan. What is your monthly payment and how much interest will you pay over the course of 30 years?

Your lender also offers you a 15 year loan at 4% interest. What is your monthly payment and how much interest will you pay over the course of 15 years?

Should you elect to take the 15 year loan how much interest do you save?