Dick borrowed $7,ooo to travel to london,his loan is to be paid in 48 monthly installments of $190.at the end of 14 months,Dick decides to pay off his loan.What is the final payoff Dick will make?
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$6,460
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Total (loan amount + interest) = 48*190 = 9120
At the end of 14 months, 13 payments have been made
13* 190 = 2470
But the interest to be paid is 14 months(14th month interest is accrued, so you can only the
back interest for the remaining 34 months.
Total interest for the 48 months = 9120 -7000 = 2120
interest refund = 2120*(32*35/2)/(48*49/2) = 1072.62
[I used interest refund fraction to calculate interest refund]
Final payment = Total installment payments - Total payments made - interest refund
= 9120 - 2470 -1072.62
=$ 5577.38
At the end of 14 months, 13 payments have been made
13* 190 = 2470
But the interest to be paid is 14 months(14th month interest is accrued, so you can only the
back interest for the remaining 34 months.
Total interest for the 48 months = 9120 -7000 = 2120
interest refund = 2120*(32*35/2)/(48*49/2) = 1072.62
[I used interest refund fraction to calculate interest refund]
Final payment = Total installment payments - Total payments made - interest refund
= 9120 - 2470 -1072.62
=$ 5577.38
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Assuming he decided to pay off the rest of the loan at the end of the 14-th month *instead of paying the 14-th installment of $190*, the answer is:
Final payoff = (total loan amount) - (the amount paid out before the end of the 14-month) = 7000 - 13*(190).
Final payoff = (total loan amount) - (the amount paid out before the end of the 14-month) = 7000 - 13*(190).