Posted on April 26, 2010.
Jay bought a boat for 7500. He put in 1000 and funded by the balance 10% for 60 months. The monthly payment? I need the formula and how you did. If you plug it into a loan calculator is only as 138.11. I need to know how
7500-1000 = 6500
Cumulative payments: $ 8286.27
Total interest paid: $ 1786.27
There are two ways to calculate loans. The first is simple and is calculated as follows:
60 months (by going to 0 when the month the loan is repaid)
Due to: 6500.00, add interest = 10% / 12 (annual rate during the months of the year 1) 54.17. total due 6554.17 to 6416.06 = 138.11
59 months
6416.06 due, add interest, the total amount due from 6469.53 to 138.11 =
6 331.42
etc.
the other is a formula that stands up to all interest earned over the term of the loan ($ 1786.27) and divides the payments so that the first number of months, you pay interest and only after that do you begin to reduce the amount owed - is depreciation, as a mortgage.
Amortization means literally to death; mortgage is French to take up the death. Both terms indicate that the loan has been structured so that we could never pay - but all our lives increased.LOL
