Planit:Loan Calculator Case Study

From Planipedia

This calculator allows you to run amortization schedules for a loan, calculate loan payments or calculate a loan balance at any point in time before or after the loan date that is entered.

Length: 3min 49 sec

Basic Terminology:

• Principal: the amount of money that is being borrowed
• Interest: the interest paid by the mortgagor, the borrower/owner, to the mortgagee, the lender for the use of the funds used to purchase the property
• Amortization of a loan: the repayment of a loan by periodic payments which, with the possible exception of the last payment, are equal in size
• Amortization Period: the total length of time to repay a loan

To calculate values for an Islamic, riba-free type of mortgage, take a look at this special example of using the Present and Future Values Calculator.

See an example of a UK endowment-type mortgage.

Country Specific

Canada English

Amortization of a Car Loan Example One: John’s parents decide to buy him a car so that he can more easily commute between university and home. The cost of the car is $20,000, so John’s parents pay $5,000 up front and take out a loan at a 6% interest rate from their bank to cover the remaining amount. The interest is compounded monthly over a period of 24 months. How much will their monthly payment be? Solution Using Loan Calculator: Select Loan Calculator from the Calculators drop-down menu on the Home page. Enter the principal of the loan, the cost of the car minus the parents' down-payment, in the Amount borrowed field. (See Figure 2.1) Enter the current date as the Loan Date. Enter the Renewal Date as the Loan Date plus 24 months Note: The Renewal Date does not always signify the end of the loan, but rather when the interest rate is liable to change, or for viewing the balance and interest paid by a particular date. In this case, car loans usually have fixed rates and we are interested in the entire loan. Enter an Interest Rate of 6%. Click the drop down menu under the Compounding field and choose Monthly. Type in 24 months (or 24÷12 years) for the Amortization. Click the drop-down menu under Payment Type and choose the Blended payment option. Note: "Blended payments" refer to payments made by the mortgagor that go against the interest owed and the principal of the loan simultaneously. Click on the Calculate button next to Payment. To View the amortization schedule: Click on the Schedule button at the bottom, once the results have populated, to view a payment schedule. (See Figure 2.2) Amortization of a Car Loan Example Two: Stewart and Mary decide to buy a new environmentally friendly car to replace their old 1998 van. They require a loan for $15,000 which their bank provides for them at a rate of 10% interest, compounded monthly. The amortization period of the loan is 48 months. What will be their monthly payment? What will be their total interest paid if they make an irregular payment of $4,000 in one (1) year? Solution Using Loan Calculator: Enter $15,000 in the Amount borrowed field. Enter today’s date for Loan Date. Enter the Renewal Date as the Loan Date plus 48 months. Enter an Interest Rate of 10% Choose Monthly for the Compounding method. Enter 48 months (or 48÷12 years) for the Amortization. For the Payment type choose the Blended payment option. Click on the Calculate button next to Payment. The payment should be $380.44 Set the Number of Irregular Payments to 1, and click the Set button to the right. New fields will appear after loading. The Date should be one year from now. The Amount can be set to $4,000 as indicated. Click Calculate beside the Amortization. Below there will be some amounts paid on the loan for the entire period, including Total Interest Paid. The total interest paid should be $2 141.25 Amortization of a Mortgage Example: A $200,000 mortgage loan is written with a 25-year amortization period, with an interest rate of 9.5% compounded monthly. To get rid of this mortgage as quickly as possible, you suggest to your client they simply index their payments by 5% each year. What is the amount of the monthly payment? What is the interest paid for both scenarios? Solution Using Loan Calculator: Enter $200,000 in the Amount borrowed' field. Enter the current date as the Loan Date. Enter the Renewal Date as the current date plus 25 years. Enter an Interest Rate of 9.5%. Click the drop down menu under the Compounding field and choose monthly. Change the Amortization option to years using the radio button. And enter 25. Click the drop down menu under the Payment type field and choose Blended payment. Click on the Calculate button next to Payment. The monthly payment for the scenario without indexing is $1,747.39 with $324,218.00 in interest paid. Now set the Increase by Year field to 5%. Click Calculate beside the Amortization period, since if the clients chose to reduce their payments, interest would not decrease significantly, and we know the clients are able to make these larger payments. Notice how the interest paid has dropped dramatically.

United States of America

Amortization of a Car Loan Example One: John’s parents decide to buy him a car so that he can more easily commute between university and home. The cost of the car is $20,000, so John’s parents pay $5,000 up front and take out a loan at a 6% interest rate from their bank to cover the remaining amount. The interest is compounded monthly over a period of 24 months. How much will their monthly payment be? Solution Using Loan Calculator: Select Loan Calculator from the Calculators drop-down menu on the Home page. Enter the principal of the loan, the cost of the car minus the parents' down-payment, in the Amount borrowed field. (See Figure 2.1) Enter the current date as the Loan Date. Enter the Renewal Date as the Loan Date plus 24 months Note: The Renewal Date does not always signify the end of the loan, but rather when the interest rate is liable to change, or for viewing the balance and interest paid by a particular date. In this case, car loans usually have fixed rates and we are interested in the entire loan. Enter an Interest Rate of 6%. Click the drop down menu under the Compounding field and choose Monthly. Type in 24 months (or 24÷12 years) for the Amortization. Click the drop-down menu under Payment Type and choose the Blended payment option. Note: "Blended payments" refer to payments made by the mortgagor that go against the interest owed and the principal of the loan simultaneously. Click on the Calculate button next to Payment. To View the amortization schedule: Click on the Schedule button at the bottom, once the results have populated, to view a payment schedule. (See Figure 2.2) Amortization of a Car Loan Example Two: Stewart and Mary decide to buy a new environmentally friendly car to replace their old 1998 van. They require a loan for $15,000 which their bank provides for them at a rate of 10% interest, compounded monthly. The amortization period of the loan is 48 months. What will be their monthly payment? What will be their total interest paid if they make an irregular payment of $4,000 in one (1) year? Solution Using Loan Calculator: Enter $15,000 in the Amount borrowed field. Enter today’s date for Loan Date. Enter the Renewal Date as the Loan Date plus 48 months. Enter an Interest Rate of 10% Choose Monthly for the Compounding method. Enter 48 months (or 48÷12 years) for the Amortization. For the Payment type choose the Blended payment option. Click on the Calculate button next to Payment. The payment should be $380.44 Set the Number of Irregular Payments to 1, and click the Set button to the right. New fields will appear after loading. The Date should be one year from now. The Amount can be set to $4,000 as indicated. Click Calculate beside the Amortization. Below there will be some amounts paid on the loan for the entire period, including Total Interest Paid. The total interest paid should be $2 141.25 Amortization of a Mortgage Example: A $200,000 mortgage loan is written with a 25-year amortization period, with an interest rate of 9.5% compounded monthly. To get rid of this mortgage as quickly as possible, you suggest to your client they simply index their payments by 5% each year. What is the amount of the monthly payment? What is the interest paid for both scenarios? Solution Using Loan Calculator: Enter $200,000 in the Amount borrowed' field. Enter the current date as the Loan Date. Enter the Renewal Date as the current date plus 25 years. Enter an Interest Rate of 9.5%. Click the drop down menu under the Compounding field and choose monthly. Change the Amortization option to years using the radio button. And enter 25. Click the drop down menu under the Payment type field and choose Blended payment. Click on the Calculate button next to Payment. The monthly payment for the scenario without indexing is $1,747.39 with $324,218.00 in interest paid. Now set the Increase by Year field to 5%. Click Calculate beside the Amortization period, since if the clients chose to reduce their payments, interest would not decrease significantly, and we know the clients are able to make these larger payments. Notice how the interest paid has dropped dramatically.

Argentina

Amortization of a Car Loan Example One: John’s parents decide to buy him a car so that he can more easily commute between university and home. The cost of the car is $75 000, so John’s parents pay $20 000 up front and take out a loan at a 6% interest rate from their bank to cover the remaining amount. The interest is compounded monthly over a period of 24 months. How much will their monthly payment be? Solution Using Loan Calculator: Select Loan Calculator from the Calculators drop-down menu on the Home page. Enter the principal of the loan, the cost of the car minus the parents' down-payment, in the Amount borrowed field. (See Figure 2.1) Enter the current date as the Loan Date. Enter the Renewal Date as the Loan Date plus 24 months Note: The Renewal Date does not always signify the end of the loan, but rather when the interest rate is liable to change, or for viewing the balance and interest paid by a particular date. In this case, car loans usually have fixed rates and we are interested in the entire loan. Enter an Interest Rate of 6%. Click the drop down menu under the Compounding field and choose Monthly. Type in 24 months (or 24÷12 years) for the Amortization. Click the drop-down menu under Payment Type and choose the Blended payment option. Note: "Blended payments" refer to payments made by the mortgagor that go against the interest owed and the principal of the loan simultaneously. Click on the Calculate button next to Payment. To View the amortization schedule: Click on the Schedule button at the bottom, once the results have populated, to view a payment schedule. (See Figure 2.2) Amortization of a Car Loan Example Two: Stewart and Mary decide to buy a new environmentally friendly car to replace their old 1998 van. They require a loan for $55 000 which their bank provides for them at a rate of 10% interest, compounded monthly. The amortization period of the loan is 48 months. What will be their monthly payment? What will be their total interest paid if they make an irregular payment of $15 000 in one (1) year? Solution Using Loan Calculator: Enter $55 000 in the Amount borrowed field. Enter today’s date for Loan Date. Enter the Renewal Date as the Loan Date plus 48 months. Enter an Interest Rate of 10% Choose Monthly for the Compounding method. Enter 48 months (or 48÷12 years) for the Amortization. For the Payment type choose the Blended payment option. Click on the Calculate button next to Payment. The payment should be $1 394.94 Set the Number of Irregular Payments to 1, and click the Set button to the right. New fields will appear after loading. The Date should be one year from now. The Amount can be set to $15 000 as indicated. Click Calculate beside the Amortization. Below there will be some amounts paid on the loan for the entire period, including Total Interest Paid. The total interest paid should be $7 784.50 Amortization of a Mortgage Example: A $765 000 mortgage loan is written with a 25-year amortization period, with an interest rate of 9.5% compounded monthly. To get rid of this mortgage as quickly as possible, you suggest to your client they simply index their payments by 5% each year. What is the amount of the monthly payment? What is the interest paid for both scenarios? Solution Using Loan Calculator: Enter $765 000 in the Amount borrowed' field. Enter the current date as the Loan Date. Enter the Renewal Date as the current date plus 25 years. Enter an Interest Rate of 9.5%. Click the drop down menu under the Compounding field and choose monthly. Change the Amortization option to years using the radio button. And enter 25. Click the drop down menu under the Payment type field and choose Blended payment. Click on the Calculate button next to Payment. The monthly payment for the scenario without indexing is $6 683.78 with $1 240 133.84 in interest paid. Now set the Increase by Year field to 5%. Click Calculate beside the Amortization period, since if the clients chose to reduce their payments, interest would not decrease significantly, and we know the clients are able to make these larger payments. Notice how the interest paid has dropped dramatically.

Brazil

Amortization of a Car Loan Example One: John’s parents decide to buy him a car so that he can more easily commute between university and home. The cost of the car is R$1 400 000, so John’s parents pay R$350 000 up front and take out a loan at a 6% interest rate from their bank to cover the remaining amount. The interest is compounded monthly over a period of 24 months. How much will their monthly payment be? Solution Using Loan Calculator: Select Loan Calculator from the Calculators drop-down menu on the Home page. Enter the principal of the loan, the cost of the car minus the parents' down-payment, in the Amount borrowed field. (See Figure 2.1) Enter the current date as the Loan Date. Enter the Renewal Date as the Loan Date plus 24 months Note: The Renewal Date does not always signify the end of the loan, but rather when the interest rate is liable to change, or for viewing the balance and interest paid by a particular date. In this case, car loans usually have fixed rates and we are interested in the entire loan. Enter an Interest Rate of 6%. Click the drop down menu under the Compounding field and choose Monthly. Type in 24 months (or 24÷12 years) for the Amortization. Click the drop-down menu under Payment Type and choose the Blended payment option. Note: "Blended payments" refer to payments made by the mortgagor that go against the interest owed and the principal of the loan simultaneously. Click on the Calculate button next to Payment. To View the amortization schedule: Click on the Schedule button at the bottom, once the results have populated, to view a payment schedule. (See Figure 2.2) Amortization of a Car Loan Example Two: Stewart and Mary decide to buy a new environmentally friendly car to replace their old 1998 van. They require a loan for R$1 100 000 which their bank provides for them at a rate of 10% interest, compounded monthly. The amortization period of the loan is 48 months. What will be their monthly payment? What will be their total interest paid if they make an irregular payment of R$300 000 in one (1) year? Solution Using Loan Calculator: Enter R$1 100 000 in the Amount borrowed field. Enter today’s date for Loan Date. Enter the Renewal Date as the Loan Date plus 48 months. Enter an Interest Rate of 10% Choose Monthly for the Compounding method. Enter 48 months (or 48÷12 years) for the Amortization. For the Payment type choose the Blended payment option. Click on the Calculate button next to Payment. The payment should be R$27 898.84 Set the Number of Irregular Payments to 1, and click the Set button to the right. New fields will appear after loading. The Date should be one year from now. The Amount can be set to R$300 000 as indicated. Click Calculate beside the Amortization. Below there will be some amounts paid on the loan for the entire period, including Total Interest Paid. The total interest paid should be R$155 689.81 Amortization of a Mortgage Example: A R$14 400 000 mortgage loan is written with a 25-year amortization period, with an interest rate of 9.5% compounded monthly. To get rid of this mortgage as quickly as possible, you suggest to your client they simply index their payments by 5% each year. What is the amount of the monthly payment? What is the interest paid for both scenarios? Solution Using Loan Calculator: Enter R$14 400 000 in the Amount borrowed' field. Enter the current date as the Loan Date. Enter the Renewal Date as the current date plus 25 years. Enter an Interest Rate of 9.5%. Click the drop down menu under the Compounding field and choose monthly. Change the Amortization option to years using the radio button. And enter 25. Click the drop down menu under the Payment type field and choose Blended payment. Click on the Calculate button next to Payment. The monthly payment for the scenario without indexing is R$125 812.32 with R$23 343 695.75 in interest paid. Now set the Increase by Year field to 5%. Click Calculate beside the Amortization period, since if the clients chose to reduce their payments, interest would not decrease significantly, and we know the clients are able to make these larger payments. Notice how the interest paid has dropped dramatically.

United Kingdom

Amortization of a Car Loan Example One: John’s parents decide to buy him a car so that he can more easily commute between university and home. The cost of the car is £12 000, so John’s parents pay £3 000 up front and take out a loan at a 6% interest rate from their bank to cover the remaining amount. The interest is compounded monthly over a period of 24 months. How much will their monthly payment be? Solution Using Loan Calculator: Select Loan Calculator from the Calculators drop-down menu on the Home page. Enter the principal of the loan, the cost of the car minus the parents' down-payment, in the Amount borrowed field. (See Figure 2.1) Enter the current date as the Loan Date. Enter the Renewal Date as the Loan Date plus 24 months Note: The Renewal Date does not always signify the end of the loan, but rather when the interest rate is liable to change, or for viewing the balance and interest paid by a particular date. In this case, car loans usually have fixed rates and we are interested in the entire loan. Enter an Interest Rate of 6%. Click the drop down menu under the Compounding field and choose Monthly. Type in 24 months (or 24÷12 years) for the Amortization. Click the drop-down menu under Payment Type and choose the Blended payment option. Note: "Blended payments" refer to payments made by the mortgagor that go against the interest owed and the principal of the loan simultaneously. Click on the Calculate button next to Payment. To View the amortization schedule: Click on the Schedule button at the bottom, once the results have populated, to view a payment schedule. (See Figure 2.2) Amortization of a Car Loan Example Two: Stewart and Mary decide to buy a new environmentally friendly car to replace their old 1998 van. They require a loan for £9 000 which their bank provides for them at a rate of 10% interest, compounded monthly. The amortization period of the loan is 48 months. What will be their monthly payment? What will be their total interest paid if they make an irregular payment of £2 500 in one (1) year? Solution Using Loan Calculator: Enter £9 000 in the Amount borrowed field. Enter today’s date for Loan Date. Enter the Renewal Date as the Loan Date plus 48 months. Enter an Interest Rate of 10% Choose Monthly for the Compounding method. Enter 48 months (or 48÷12 years) for the Amortization. For the Payment type choose the Blended payment option. Click on the Calculate button next to Payment. The payment should be £228.26 Set the Number of Irregular Payments to 1, and click the Set button to the right. New fields will appear after loading. The Date should be one year from now. The Amount can be set to £2 500 as indicated. Click Calculate beside the Amortization. Below there will be some amounts paid on the loan for the entire period, including Total Interest Paid. The total interest paid should be £1 264.74 Amortization of a Mortgage Example: A £125 000 mortgage loan is written with a 25-year amortization period, with an interest rate of 9.5% compounded monthly. To get rid of this mortgage as quickly as possible, you suggest to your client they simply index their payments by 5% each year. What is the amount of the monthly payment? What is the interest paid for both scenarios? Solution Using Loan Calculator: Enter £125 000 in the Amount borrowed' field. Enter the current date as the Loan Date. Enter the Renewal Date as the current date plus 25 years. Enter an Interest Rate of 9.5%. Click the drop down menu under the Compounding field and choose monthly. Change the Amortization option to years using the radio button. And enter 25. Click the drop down menu under the Payment type field and choose Blended payment. Click on the Calculate button next to Payment. The monthly payment for the scenario without indexing is £1 092.12 with £202 636.25 in interest paid. Now set the Increase by Year field to 5%. Click Calculate beside the Amortization period, since if the clients chose to reduce their payments, interest would not decrease significantly, and we know the clients are able to make these larger payments. Notice how the interest paid has dropped dramatically.

Russia

Amortization of a Car Loan Example One: John’s parents decide to buy him a car so that he can more easily commute between university and home. The cost of the car is руб.600 000, so John’s parents pay руб.150 000 up front and take out a loan at a 6% interest rate from their bank to cover the remaining amount. The interest is compounded monthly over a period of 24 months. How much will their monthly payment be? Solution Using Loan Calculator: Select Loan Calculator from the Calculators drop-down menu on the Home page. Enter the principal of the loan, the cost of the car minus the parents' down-payment, in the Amount borrowed field. (See Figure 2.1) Enter the current date as the Loan Date. Enter the Renewal Date as the Loan Date plus 24 months Note: The Renewal Date does not always signify the end of the loan, but rather when the interest rate is liable to change, or for viewing the balance and interest paid by a particular date. In this case, car loans usually have fixed rates and we are interested in the entire loan. Enter an Interest Rate of 6%. Click the drop down menu under the Compounding field and choose Monthly. Type in 24 months (or 24÷12 years) for the Amortization. Click the drop-down menu under Payment Type and choose the Blended payment option. Note: "Blended payments" refer to payments made by the mortgagor that go against the interest owed and the principal of the loan simultaneously. Click on the Calculate button next to Payment. To View the amortization schedule: Click on the Schedule button at the bottom, once the results have populated, to view a payment schedule. (See Figure 2.2) Amortization of a Car Loan Example Two: Stewart and Mary decide to buy a new environmentally friendly car to replace their old 1998 van. They require a loan for руб.450 000 which their bank provides for them at a rate of 10% interest, compounded monthly. The amortization period of the loan is 48 months. What will be their monthly payment? What will be their total interest paid if they make an irregular payment of руб.120 000 in one (1) year? Solution Using Loan Calculator: Enter руб.450 000 in the Amount borrowed field. Enter today’s date for Loan Date. Enter the Renewal Date as the Loan Date plus 48 months. Enter an Interest Rate of 10% Choose Monthly for the Compounding method. Enter 48 months (or 48÷12 years) for the Amortization. For the Payment type choose the Blended payment option. Click on the Calculate button next to Payment. The payment should be руб.11 413.16 Set the Number of Irregular Payments to 1, and click the Set button to the right. New fields will appear after loading. The Date should be one year from now. The Amount can be set to руб.120 000 as indicated. Click Calculate beside the Amortization. Below there will be some amounts paid on the loan for the entire period, including Total Interest Paid. The total interest paid should be руб.64 237.58 Amortization of a Mortgage Example: A руб.6 000 000 mortgage loan is written with a 25-year amortization period, with an interest rate of 9.5% compounded monthly. To get rid of this mortgage as quickly as possible, you suggest to your client they simply index their payments by 5% each year. What is the amount of the monthly payment? What is the interest paid for both scenarios? Solution Using Loan Calculator: Enter руб.6 000 000 in the Amount borrowed' field. Enter the current date as the Loan Date. Enter the Renewal Date as the current date plus 25 years. Enter an Interest Rate of 9.5%. Click the drop down menu under the Compounding field and choose monthly. Change the Amortization option to years using the radio button. And enter 25. Click the drop down menu under the Payment type field and choose Blended payment. Click on the Calculate button next to Payment. The monthly payment for the scenario without indexing is руб.52 421.80 with руб.9 726 539.90 in interest paid. Now set the Increase by Year field to 5%. Click Calculate beside the Amortization period, since if the clients chose to reduce their payments, interest would not decrease significantly, and we know the clients are able to make these larger payments. Notice how the interest paid has dropped dramatically.

China

Amortization of a Car Loan Example One: John’s parents decide to buy him a car so that he can more easily commute between university and home. The cost of the car is ¥130 000, so John’s parents pay ¥30 000 up front and take out a loan at a 6% interest rate from their bank to cover the remaining amount. The interest is compounded monthly over a period of 24 months. How much will their monthly payment be? Solution Using Loan Calculator: Select Loan Calculator from the Calculators drop-down menu on the Home page. Enter the principal of the loan, the cost of the car minus the parents' down-payment, in the Amount borrowed field. (See Figure 2.1) Enter the current date as the Loan Date. Enter the Renewal Date as the Loan Date plus 24 months Note: The Renewal Date does not always signify the end of the loan, but rather when the interest rate is liable to change, or for viewing the balance and interest paid by a particular date. In this case, car loans usually have fixed rates and we are interested in the entire loan. Enter an Interest Rate of 6%. Click the drop down menu under the Compounding field and choose Monthly. Type in 24 months (or 24÷12 years) for the Amortization. Click the drop-down menu under Payment Type and choose the Blended payment option. Note: "Blended payments" refer to payments made by the mortgagor that go against the interest owed and the principal of the loan simultaneously. Click on the Calculate button next to Payment. To View the amortization schedule: Click on the Schedule button at the bottom, once the results have populated, to view a payment schedule. (See Figure 2.2) Amortization of a Car Loan Example Two: Stewart and Mary decide to buy a new environmentally friendly car to replace their old 1998 van. They require a loan for ¥100 000 which their bank provides for them at a rate of 10% interest, compounded monthly. The amortization period of the loan is 48 months. What will be their monthly payment? What will be their total interest paid if they make an irregular payment of ¥25 000 in one (1) year? Solution Using Loan Calculator: Enter ¥100 000 in the Amount borrowed field. Enter today’s date for Loan Date. Enter the Renewal Date as the Loan Date plus 48 months. Enter an Interest Rate of 10% Choose Monthly for the Compounding method. Enter 48 months (or 48÷12 years) for the Amortization. For the Payment type choose the Blended payment option. Click on the Calculate button next to Payment. The payment should be ¥2 536.26 Set the Number of Irregular Payments to 1, and click the Set button to the right. New fields will appear after loading. The Date should be one year from now. The Amount can be set to ¥25 000 as indicated. Click Calculate beside the Amortization. Below there will be some amounts paid on the loan for the entire period, including Total Interest Paid. The total interest paid should be ¥14 636.98 Amortization of a Mortgage Example: A ¥1 300 000 mortgage loan is written with a 25-year amortization period, with an interest rate of 9.5% compounded monthly. To get rid of this mortgage as quickly as possible, you suggest to your client they simply index their payments by 5% each year. What is the amount of the monthly payment? What is the interest paid for both scenarios? Solution Using Loan Calculator: Enter ¥1 300 000 in the Amount borrowed' field. Enter the current date as the Loan Date. Enter the Renewal Date as the current date plus 25 years. Enter an Interest Rate of 9.5%. Click the drop down menu under the Compounding field and choose monthly. Change the Amortization option to years using the radio button. And enter 25. Click the drop down menu under the Payment type field and choose Blended payment. Click on the Calculate button next to Payment. The monthly payment for the scenario without indexing is ¥11 358.06 with ¥2 107 416.98 in interest paid. Now set the Increase by Year field to 5%. Click Calculate beside the Amortization period, since if the clients chose to reduce their payments, interest would not decrease significantly, and we know the clients are able to make these larger payments. Notice how the interest paid has dropped dramatically.

Malaysia

Amortization of a Car Loan Example One: John’s parents decide to buy him a car so that he can more easily commute between university and home. The cost of the car is RM60 000, so John’s parents pay RM15 000 up front and take out a loan at a 6% interest rate from their bank to cover the remaining amount. The interest is compounded monthly over a period of 24 months. How much will their monthly payment be? Solution Using Loan Calculator: Select Loan Calculator from the Calculators drop-down menu on the Home page. Enter the principal of the loan, the cost of the car minus the parents' down-payment, in the Amount borrowed field. (See Figure 2.1) Enter the current date as the Loan Date. Enter the Renewal Date as the Loan Date plus 24 months Note: The Renewal Date does not always signify the end of the loan, but rather when the interest rate is liable to change, or for viewing the balance and interest paid by a particular date. In this case, car loans usually have fixed rates and we are interested in the entire loan. Enter an Interest Rate of 6%. Click the drop down menu under the Compounding field and choose Monthly. Type in 24 months (or 24÷12 years) for the Amortization. Click the drop-down menu under Payment Type and choose the Blended payment option. Note: "Blended payments" refer to payments made by the mortgagor that go against the interest owed and the principal of the loan simultaneously. Click on the Calculate button next to Payment. To View the amortization schedule: Click on the Schedule button at the bottom, once the results have populated, to view a payment schedule. (See Figure 2.2) Amortization of a Car Loan Example Two: Stewart and Mary decide to buy a new environmentally friendly car to replace their old 1998 van. They require a loan for RM45 000 which their bank provides for them at a rate of 10% interest, compounded monthly. The amortization period of the loan is 48 months. What will be their monthly payment? What will be their total interest paid if they make an irregular payment of RM12 000 in one (1) year? Solution Using Loan Calculator: Enter RM45 000 in the Amount borrowed field. Enter today’s date for Loan Date. Enter the Renewal Date as the Loan Date plus 48 months. Enter an Interest Rate of 10% Choose Monthly for the Compounding method. Enter 48 months (or 48÷12 years) for the Amortization. For the Payment type choose the Blended payment option. Click on the Calculate button next to Payment. The payment should be RM1 141.32 Set the Number of Irregular Payments to 1, and click the Set button to the right. New fields will appear after loading. The Date should be one year from now. The Amount can be set to RM12 000 as indicated. Click Calculate beside the Amortization. Below there will be some amounts paid on the loan for the entire period, including Total Interest Paid. The total interest paid should be RM6 423.74 Amortization of a Mortgage Example: A RM600 000 mortgage loan is written with a 25-year amortization period, with an interest rate of 9.5% compounded monthly. To get rid of this mortgage as quickly as possible, you suggest to your client they simply index their payments by 5% each year. What is the amount of the monthly payment? What is the interest paid for both scenarios? Solution Using Loan Calculator: Enter RM600 000 in the Amount borrowed' field. Enter the current date as the Loan Date. Enter the Renewal Date as the current date plus 25 years. Enter an Interest Rate of 9.5%. Click the drop down menu under the Compounding field and choose monthly. Change the Amortization option to years using the radio button. And enter 25. Click the drop down menu under the Payment type field and choose Blended payment. Click on the Calculate button next to Payment. The monthly payment for the scenario without indexing is RM5 242.18 with RM972 653.99 in interest paid. Now set the Increase by Year field to 5%. Click Calculate beside the Amortization period, since if the clients chose to reduce their payments, interest would not decrease significantly, and we know the clients are able to make these larger payments. Notice how the interest paid has dropped dramatically.

Singapore

Amortization of a Car Loan Example One: John’s parents decide to buy him a car so that he can more easily commute between university and home. The cost of the car is S$25 000, so John’s parents pay S$6 500 up front and take out a loan at a 6% interest rate from their bank to cover the remaining amount. The interest is compounded monthly over a period of 24 months. How much will their monthly payment be? Solution Using Loan Calculator: Select Loan Calculator from the Calculators drop-down menu on the Home page. Enter the principal of the loan, the cost of the car minus the parents' down-payment, in the Amount borrowed field. (See Figure 2.1) Enter the current date as the Loan Date. Enter the Renewal Date as the Loan Date plus 24 months Note: The Renewal Date does not always signify the end of the loan, but rather when the interest rate is liable to change, or for viewing the balance and interest paid by a particular date. In this case, car loans usually have fixed rates and we are interested in the entire loan. Enter an Interest Rate of 6%. Click the drop down menu under the Compounding field and choose Monthly. Type in 24 months (or 24÷12 years) for the Amortization. Click the drop-down menu under Payment Type and choose the Blended payment option. Note: "Blended payments" refer to payments made by the mortgagor that go against the interest owed and the principal of the loan simultaneously. Click on the Calculate button next to Payment. To View the amortization schedule: Click on the Schedule button at the bottom, once the results have populated, to view a payment schedule. (See Figure 2.2) Amortization of a Car Loan Example Two: Stewart and Mary decide to buy a new environmentally friendly car to replace their old 1998 van. They require a loan for S$20 000 which their bank provides for them at a rate of 10% interest, compounded monthly. The amortization period of the loan is 48 months. What will be their monthly payment? What will be their total interest paid if they make an irregular payment of S$5 000 in one (1) year? Solution Using Loan Calculator: Enter S$20 000 in the Amount borrowed field. Enter today’s date for Loan Date. Enter the Renewal Date as the Loan Date plus 48 months. Enter an Interest Rate of 10% Choose Monthly for the Compounding method. Enter 48 months (or 48÷12 years) for the Amortization. For the Payment type choose the Blended payment option. Click on the Calculate button next to Payment. The payment should be S$507.25 Set the Number of Irregular Payments to 1, and click the Set button to the right. New fields will appear after loading. The Date should be one year from now. The Amount can be set to S$5 000 as indicated. Click Calculate beside the Amortization. Below there will be some amounts paid on the loan for the entire period, including Total Interest Paid. The total interest paid should be S$2 927.41 Amortization of a Mortgage Example: A S$260 000 mortgage loan is written with a 25-year amortization period, with an interest rate of 9.5% compounded monthly. To get rid of this mortgage as quickly as possible, you suggest to your client they simply index their payments by 5% each year. What is the amount of the monthly payment? What is the interest paid for both scenarios? Solution Using Loan Calculator: Enter S$260 000 in the Amount borrowed' field. Enter the current date as the Loan Date. Enter the Renewal Date as the current date plus 25 years. Enter an Interest Rate of 9.5%. Click the drop down menu under the Compounding field and choose monthly. Change the Amortization option to years using the radio button. And enter 25. Click the drop down menu under the Payment type field and choose Blended payment. Click on the Calculate button next to Payment. The monthly payment for the scenario without indexing is S$2 271.61 with S$421 483.40 in interest paid. Now set the Increase by Year field to 5%. Click Calculate beside the Amortization period, since if the clients chose to reduce their payments, interest would not decrease significantly, and we know the clients are able to make these larger payments. Notice how the interest paid has dropped dramatically.

Hong Kong

Amortization of a Car Loan Example One: John’s parents decide to buy him a car so that he can more easily commute between university and home. The cost of the car is HK$150 000, so John’s parents pay HK$40 000 up front and take out a loan at a 6% interest rate from their bank to cover the remaining amount. The interest is compounded monthly over a period of 24 months. How much will their monthly payment be? Solution Using Loan Calculator: Select Loan Calculator from the Calculators drop-down menu on the Home page. Enter the principal of the loan, the cost of the car minus the parents' down-payment, in the Amount borrowed field. (See Figure 2.1) Enter the current date as the Loan Date. Enter the Renewal Date as the Loan Date plus 24 months Note: The Renewal Date does not always signify the end of the loan, but rather when the interest rate is liable to change, or for viewing the balance and interest paid by a particular date. In this case, car loans usually have fixed rates and we are interested in the entire loan. Enter an Interest Rate of 6%. Click the drop down menu under the Compounding field and choose Monthly. Type in 24 months (or 24÷12 years) for the Amortization. Click the drop-down menu under Payment Type and choose the Blended payment option. Note: "Blended payments" refer to payments made by the mortgagor that go against the interest owed and the principal of the loan simultaneously. Click on the Calculate button next to Payment. To View the amortization schedule: Click on the Schedule button at the bottom, once the results have populated, to view a payment schedule. (See Figure 2.2) Amortization of a Car Loan Example Two: Stewart and Mary decide to buy a new environmentally friendly car to replace their old 1998 van. They require a loan for HK$115 000 which their bank provides for them at a rate of 10% interest, compounded monthly. The amortization period of the loan is 48 months. What will be their monthly payment? What will be their total interest paid if they make an irregular payment of HK$30 000 in one (1) year? Solution Using Loan Calculator: Enter HK$115 000 in the Amount borrowed field. Enter today’s date for Loan Date. Enter the Renewal Date as the Loan Date plus 48 months. Enter an Interest Rate of 10% Choose Monthly for the Compounding method. Enter 48 months (or 48÷12 years) for the Amortization. For the Payment type choose the Blended payment option. Click on the Calculate button next to Payment. The payment should be HK$2 916.70 Set the Number of Irregular Payments to 1, and click the Set button to the right. New fields will appear after loading. The Date should be one year from now. The Amount can be set to HK$30 000 as indicated. Click Calculate beside the Amortization. Below there will be some amounts paid on the loan for the entire period, including Total Interest Paid. The total interest paid should be HK$16 549.79 Amortization of a Mortgage Example: A HK$1 500 000 mortgage loan is written with a 25-year amortization period, with an interest rate of 9.5% compounded monthly. To get rid of this mortgage as quickly as possible, you suggest to your client they simply index their payments by 5% each year. What is the amount of the monthly payment? What is the interest paid for both scenarios? Solution Using Loan Calculator: Enter HK$1 500 000 in the Amount borrowed' field. Enter the current date as the Loan Date. Enter the Renewal Date as the current date plus 25 years. Enter an Interest Rate of 9.5%. Click the drop down menu under the Compounding field and choose monthly. Change the Amortization option to years using the radio button. And enter 25. Click the drop down menu under the Payment type field and choose Blended payment. Click on the Calculate button next to Payment. The monthly payment for the scenario without indexing is HK$13 105.45 with HK$2 431 634.97 in interest paid. Now set the Increase by Year field to 5%. Click Calculate beside the Amortization period, since if the clients chose to reduce their payments, interest would not decrease significantly, and we know the clients are able to make these larger payments. Notice how the interest paid has dropped dramatically.

India

Amortization of a Car Loan Example One: John’s parents decide to buy him a car so that he can more easily commute between university and home. The cost of the car is 875 000, so John’s parents pay 225 000 up front and take out a loan at a 6% interest rate from their bank to cover the remaining amount. The interest is compounded monthly over a period of 24 months. How much will their monthly payment be? Solution Using Loan Calculator: Select Loan Calculator from the Calculators drop-down menu on the Home page. Enter the principal of the loan, the cost of the car minus the parents' down-payment, in the Amount borrowed field. (See Figure 2.1) Enter the current date as the Loan Date. Enter the Renewal Date as the Loan Date plus 24 months Note: The Renewal Date does not always signify the end of the loan, but rather when the interest rate is liable to change, or for viewing the balance and interest paid by a particular date. In this case, car loans usually have fixed rates and we are interested in the entire loan. Enter an Interest Rate of 6%. Click the drop down menu under the Compounding field and choose Monthly. Type in 24 months (or 24÷12 years) for the Amortization. Click the drop-down menu under Payment Type and choose the Blended payment option. Note: "Blended payments" refer to payments made by the mortgagor that go against the interest owed and the principal of the loan simultaneously. Click on the Calculate button next to Payment. To View the amortization schedule: Click on the Schedule button at the bottom, once the results have populated, to view a payment schedule. (See Figure 2.2) Amortization of a Car Loan Example Two: Stewart and Mary decide to buy a new environmentally friendly car to replace their old 1998 van. They require a loan for 650 000 which their bank provides for them at a rate of 10% interest, compounded monthly. The amortization period of the loan is 48 months. What will be their monthly payment? What will be their total interest paid if they make an irregular payment of 175 000 in one (1) year? Solution Using Loan Calculator: Enter 650 000 in the Amount borrowed field. Enter today’s date for Loan Date. Enter the Renewal Date as the Loan Date plus 48 months. Enter an Interest Rate of 10% Choose Monthly for the Compounding method. Enter 48 months (or 48÷12 years) for the Amortization. For the Payment type choose the Blended payment option. Click on the Calculate button next to Payment. The payment should be 16 485.68 Set the Number of Irregular Payments to 1, and click the Set button to the right. New fields will appear after loading. The Date should be one year from now. The Amount can be set to 175 000 as indicated. Click Calculate beside the Amortization. Below there will be some amounts paid on the loan for the entire period, including Total Interest Paid. The total interest paid should be 92 453.75 Amortization of a Mortgage Example: A 8 800 000 mortgage loan is written with a 25-year amortization period, with an interest rate of 9.5% compounded monthly. To get rid of this mortgage as quickly as possible, you suggest to your client they simply index their payments by 5% each year. What is the amount of the monthly payment? What is the interest paid for both scenarios? Solution Using Loan Calculator: Enter 8 800 000 in the Amount borrowed' field. Enter the current date as the Loan Date. Enter the Renewal Date as the current date plus 25 years. Enter an Interest Rate of 9.5%. Click the drop down menu under the Compounding field and choose monthly. Change the Amortization option to years using the radio button. And enter 25. Click the drop down menu under the Payment type field and choose Blended payment. Click on the Calculate button next to Payment. The monthly payment for the scenario without indexing is 76 885.31 with 14 265 591.85 in interest paid. Now set the Increase by Year field to 5%. Click Calculate beside the Amortization period, since if the clients chose to reduce their payments, interest would not decrease significantly, and we know the clients are able to make these larger payments. Notice how the interest paid has dropped dramatically.

Caribbean

Jamaica Amortization of a Car Loan Example One: John’s parents decide to buy him a car so that he can more easily commute between university and home. The cost of the car is J$1 650 000, so John’s parents pay J$415 000 up front and take out a loan at a 6% interest rate from their bank to cover the remaining amount. The interest is compounded monthly over a period of 24 months. How much will their monthly payment be? Solution Using Loan Calculator: Select Loan Calculator from the Calculators drop-down menu on the Home page. Enter the principal of the loan, the cost of the car minus the parents' down-payment, in the Amount borrowed field. (See Figure 2.1) Enter the current date as the Loan Date. Enter the Renewal Date as the Loan Date plus 24 months Note: The Renewal Date does not always signify the end of the loan, but rather when the interest rate is liable to change, or for viewing the balance and interest paid by a particular date. In this case, car loans usually have fixed rates and we are interested in the entire loan. Enter an Interest Rate of 6%. Click the drop down menu under the Compounding field and choose Monthly. Type in 24 months (or 24÷12 years) for the Amortization. Click the drop-down menu under Payment Type and choose the Blended payment option. Note: "Blended payments" refer to payments made by the mortgagor that go against the interest owed and the principal of the loan simultaneously. Click on the Calculate button next to Payment. To View the amortization schedule: Click on the Schedule button at the bottom, once the results have populated, to view a payment schedule. (See Figure 2.2) Amortization of a Car Loan Example Two: Stewart and Mary decide to buy a new environmentally friendly car to replace their old 1998 van. They require a loan for J$1 240 000 which their bank provides for them at a rate of 10% interest, compounded monthly. The amortization period of the loan is 48 months. What will be their monthly payment? What will be their total interest paid if they make an irregular payment of J$330 000 in one (1) year? Solution Using Loan Calculator: Enter J$1 240 000 in the Amount borrowed field. Enter today’s date for Loan Date. Enter the Renewal Date as the Loan Date plus 48 months. Enter an Interest Rate of 10% Choose Monthly for the Compounding method. Enter 48 months (or 48÷12 years) for the Amortization. For the Payment type choose the Blended payment option. Click on the Calculate button next to Payment. The payment should be J$31 449.60 Set the Number of Irregular Payments to 1, and click the Set button to the right. New fields will appear after loading. The Date should be one year from now. The Amount can be set to J$330 000 as indicated. Click Calculate beside the Amortization. Below there will be some amounts paid on the loan for the entire period, including Total Interest Paid. The total interest paid should be J$177 143.72 Amortization of a Mortgage Example: A J$16 500 000 mortgage loan is written with a 25-year amortization period, with an interest rate of 9.5% compounded monthly. To get rid of this mortgage as quickly as possible, you suggest to your client they simply index their payments by 5% each year. What is the amount of the monthly payment? What is the interest paid for both scenarios? Solution Using Loan Calculator: Enter J$16 500 000 in the Amount borrowed' field. Enter the current date as the Loan Date. Enter the Renewal Date as the current date plus 25 years. Enter an Interest Rate of 9.5%. Click the drop down menu under the Compounding field and choose monthly. Change the Amortization option to years using the radio button. And enter 25. Click the drop down menu under the Payment type field and choose Blended payment. Click on the Calculate button next to Payment. The monthly payment for the scenario without indexing is J$144 159.95 with J$26 747 984.71 in interest paid. Now set the Increase by Year field to 5%. Click Calculate beside the Amortization period, since if the clients chose to reduce their payments, interest would not decrease significantly, and we know the clients are able to make these larger payments. Notice how the interest paid has dropped dramatically. Trinidad and Tobago Amortization of a Car Loan Example One: John’s parents decide to buy him a car so that he can more easily commute between university and home. The cost of the car is TT$125 000, so John’s parents pay TT$30 000 up front and take out a loan at a 6% interest rate from their bank to cover the remaining amount. The interest is compounded monthly over a period of 24 months. How much will their monthly payment be? Solution Using Loan Calculator: Select Loan Calculator from the Calculators drop-down menu on the Home page. Enter the principal of the loan, the cost of the car minus the parents' down-payment, in the Amount borrowed field. (See Figure 2.1) Enter the current date as the Loan Date. Enter the Renewal Date as the Loan Date plus 24 months Note: The Renewal Date does not always signify the end of the loan, but rather when the interest rate is liable to change, or for viewing the balance and interest paid by a particular date. In this case, car loans usually have fixed rates and we are interested in the entire loan. Enter an Interest Rate of 6%. Click the drop down menu under the Compounding field and choose Monthly. Type in 24 months (or 24÷12 years) for the Amortization. Click the drop-down menu under Payment Type and choose the Blended payment option. Note: "Blended payments" refer to payments made by the mortgagor that go against the interest owed and the principal of the loan simultaneously. Click on the Calculate button next to Payment. To View the amortization schedule: Click on the Schedule button at the bottom, once the results have populated, to view a payment schedule. (See Figure 2.2) Amortization of a Car Loan Example Two: Stewart and Mary decide to buy a new environmentally friendly car to replace their old 1998 van. They require a loan for TT$90 000 which their bank provides for them at a rate of 10% interest, compounded monthly. The amortization period of the loan is 48 months. What will be their monthly payment? What will be their total interest paid if they make an irregular payment of TT$25 000 in one (1) year? Solution Using Loan Calculator: Enter TT$90 000 in the Amount borrowed field. Enter today’s date for Loan Date. Enter the Renewal Date as the Loan Date plus 48 months. Enter an Interest Rate of 10% Choose Monthly for the Compounding method. Enter 48 months (or 48÷12 years) for the Amortization. For the Payment type choose the Blended payment option. Click on the Calculate button next to Payment. The payment should be TT$2 282.63 Set the Number of Irregular Payments to 1, and click the Set button to the right. New fields will appear after loading. The Date should be one year from now. The Amount can be set to TT$25 000 as indicated. Click Calculate beside the Amortization. Below there will be some amounts paid on the loan for the entire period, including Total Interest Paid. The total interest paid should be TT$12 647.22 Amortization of a Mortgage Example: A TT$1 225 000 mortgage loan is written with a 25-year amortization period, with an interest rate of 9.5% compounded monthly. To get rid of this mortgage as quickly as possible, you suggest to your client they simply index their payments by 5% each year. What is the amount of the monthly payment? What is the interest paid for both scenarios? Solution Using Loan Calculator: Enter TT$1 225 000 in the Amount borrowed' field. Enter the current date as the Loan Date. Enter the Renewal Date as the current date plus 25 years. Enter an Interest Rate of 9.5%. Click the drop down menu under the Compounding field and choose monthly. Change the Amortization option to years using the radio button. And enter 25. Click the drop down menu under the Payment type field and choose Blended payment. Click on the Calculate button next to Payment. The monthly payment for the scenario without indexing is TT$10 702.78 with TT$1 985 835.23 in interest paid. Now set the Increase by Year field to 5%. Click Calculate beside the Amortization period, since if the clients chose to reduce their payments, interest would not decrease significantly, and we know the clients are able to make these larger payments. Notice how the interest paid has dropped dramatically. Barbados Amortization of a Car Loan Example One: John’s parents decide to buy him a car so that he can more easily commute between university and home. The cost of the car is Bds$40 000, so John’s parents pay Bds$10 000 up front and take out a loan at a 6% interest rate from their bank to cover the remaining amount. The interest is compounded monthly over a period of 24 months. How much will their monthly payment be? Solution Using Loan Calculator: Select Loan Calculator from the Calculators drop-down menu on the Home page. Enter the principal of the loan, the cost of the car minus the parents' down-payment, in the Amount borrowed field. (See Figure 2.1) Enter the current date as the Loan Date. Enter the Renewal Date as the Loan Date plus 24 months Note: The Renewal Date does not always signify the end of the loan, but rather when the interest rate is liable to change, or for viewing the balance and interest paid by a particular date. In this case, car loans usually have fixed rates and we are interested in the entire loan. Enter an Interest Rate of 6%. Click the drop down menu under the Compounding field and choose Monthly. Type in 24 months (or 24÷12 years) for the Amortization. Click the drop-down menu under Payment Type and choose the Blended payment option. Note: "Blended payments" refer to payments made by the mortgagor that go against the interest owed and the principal of the loan simultaneously. Click on the Calculate button next to Payment. To View the amortization schedule: Click on the Schedule button at the bottom, once the results have populated, to view a payment schedule. (See Figure 2.2) Amortization of a Car Loan Example Two: Stewart and Mary decide to buy a new environmentally friendly car to replace their old 1998 van. They require a loan for Bds$30 000 which their bank provides for them at a rate of 10% interest, compounded monthly. The amortization period of the loan is 48 months. What will be their monthly payment? What will be their total interest paid if they make an irregular payment of Bds$7 750 in one (1) year? Solution Using Loan Calculator: Enter Bds$30 000 in the Amount borrowed field. Enter today’s date for Loan Date. Enter the Renewal Date as the Loan Date plus 48 months. Enter an Interest Rate of 10% Choose Monthly for the Compounding method. Enter 48 months (or 48÷12 years) for the Amortization. For the Payment type choose the Blended payment option. Click on the Calculate button next to Payment. The payment should be Bds$760.88 Set the Number of Irregular Payments to 1, and click the Set button to the right. New fields will appear after loading. The Date should be one year from now. The Amount can be set to Bds$7 750 as indicated. Click Calculate beside the Amortization. Below there will be some amounts paid on the loan for the entire period, including Total Interest Paid. The total interest paid should be Bds$1 076.15 Amortization of a Mortgage Example: A Bds$390 000 mortgage loan is written with a 25-year amortization period, with an interest rate of 9.5% compounded monthly. To get rid of this mortgage as quickly as possible, you suggest to your client they simply index their payments by 5% each year. What is the amount of the monthly payment? What is the interest paid for both scenarios? Solution Using Loan Calculator: Enter Bds$390 000 in the Amount borrowed' field. Enter the current date as the Loan Date. Enter the Renewal Date as the current date plus 25 years. Enter an Interest Rate of 9.5%. Click the drop down menu under the Compounding field and choose monthly. Change the Amortization option to years using the radio button. And enter 25. Click the drop down menu under the Payment type field and choose Blended payment. Click on the Calculate button next to Payment. The monthly payment for the scenario without indexing is Bds$3 407.42 with Bds$632 225.09 in interest paid. Now set the Increase by Year field to 5%. Click Calculate beside the Amortization period, since if the clients chose to reduce their payments, interest would not decrease significantly, and we know the clients are able to make these larger payments. Notice how the interest paid has dropped dramatically. Bermuda Amortization of a Car Loan Example One: John’s parents decide to buy him a car so that he can more easily commute between university and home. The cost of the car is BD$20 000, so John’s parents pay BD$5 000 up front and take out a loan at a 6% interest rate from their bank to cover the remaining amount. The interest is compounded monthly over a period of 24 months. How much will their monthly payment be? Solution Using Loan Calculator: Select Loan Calculator from the Calculators drop-down menu on the Home page. Enter the principal of the loan, the cost of the car minus the parents' down-payment, in the Amount borrowed field. (See Figure 2.1) Enter the current date as the Loan Date. Enter the Renewal Date as the Loan Date plus 24 months Note: The Renewal Date does not always signify the end of the loan, but rather when the interest rate is liable to change, or for viewing the balance and interest paid by a particular date. In this case, car loans usually have fixed rates and we are interested in the entire loan. Enter an Interest Rate of 6%. Click the drop down menu under the Compounding field and choose Monthly. Type in 24 months (or 24÷12 years) for the Amortization. Click the drop-down menu under Payment Type and choose the Blended payment option. Note: "Blended payments" refer to payments made by the mortgagor that go against the interest owed and the principal of the loan simultaneously. Click on the Calculate button next to Payment. To View the amortization schedule: Click on the Schedule button at the bottom, once the results have populated, to view a payment schedule. (See Figure 2.2) Amortization of a Car Loan Example Two: Stewart and Mary decide to buy a new environmentally friendly car to replace their old 1998 van. They require a loan for BD$15 000 which their bank provides for them at a rate of 10% interest, compounded monthly. The amortization period of the loan is 48 months. What will be their monthly payment? What will be their total interest paid if they make an irregular payment of BD$4 000 in one (1) year? Solution Using Loan Calculator: Enter BD$15 000 in the Amount borrowed field. Enter today’s date for Loan Date. Enter the Renewal Date as the Loan Date plus 48 months. Enter an Interest Rate of 10% Choose Monthly for the Compounding method. Enter 48 months (or 48÷12 years) for the Amortization. For the Payment type choose the Blended payment option. Click on the Calculate button next to Payment. The payment should be BD$380.44 Set the Number of Irregular Payments to 1, and click the Set button to the right. New fields will appear after loading. The Date should be one year from now. The Amount can be set to BD$4 000 as indicated. Click Calculate beside the Amortization. Below there will be some amounts paid on the loan for the entire period, including Total Interest Paid. The total interest paid should be BD$2 141.25 Amortization of a Mortgage Example: A BD$190 000 mortgage loan is written with a 25-year amortization period, with an interest rate of 9.5% compounded monthly. To get rid of this mortgage as quickly as possible, you suggest to your client they simply index their payments by 5% each year. What is the amount of the monthly payment? What is the interest paid for both scenarios? Solution Using Loan Calculator: Enter BD$190 000 in the Amount borrowed' field. Enter the current date as the Loan Date. Enter the Renewal Date as the current date plus 25 years. Enter an Interest Rate of 9.5%. Click the drop down menu under the Compounding field and choose monthly. Change the Amortization option to years using the radio button. And enter 25. Click the drop down menu under the Payment type field and choose Blended payment. Click on the Calculate button next to Payment. The monthly payment for the scenario without indexing is BD$1 660.02 with BD$308 007.10 in interest paid. Now set the Increase by Year field to 5%. Click Calculate beside the Amortization period, since if the clients chose to reduce their payments, interest would not decrease significantly, and we know the clients are able to make these larger payments. Notice how the interest paid has dropped dramatically. Bahamas Amortization of a Car Loan Example One: John’s parents decide to buy him a car so that he can more easily commute between university and home. The cost of the car is B$20 000, so John’s parents pay B$5 000 up front and take out a loan at a 6% interest rate from their bank to cover the remaining amount. The interest is compounded monthly over a period of 24 months. How much will their monthly payment be? Solution Using Loan Calculator: Select Loan Calculator from the Calculators drop-down menu on the Home page. Enter the principal of the loan, the cost of the car minus the parents' down-payment, in the Amount borrowed field. (See Figure 2.1) Enter the current date as the Loan Date. Enter the Renewal Date as the Loan Date plus 24 months Note: The Renewal Date does not always signify the end of the loan, but rather when the interest rate is liable to change, or for viewing the balance and interest paid by a particular date. In this case, car loans usually have fixed rates and we are interested in the entire loan. Enter an Interest Rate of 6%. Click the drop down menu under the Compounding field and choose Monthly. Type in 24 months (or 24÷12 years) for the Amortization. Click the drop-down menu under Payment Type and choose the Blended payment option. Note: "Blended payments" refer to payments made by the mortgagor that go against the interest owed and the principal of the loan simultaneously. Click on the Calculate button next to Payment. To View the amortization schedule: Click on the Schedule button at the bottom, once the results have populated, to view a payment schedule. (See Figure 2.2) Amortization of a Car Loan Example Two: Stewart and Mary decide to buy a new environmentally friendly car to replace their old 1998 van. They require a loan for B$15 000 which their bank provides for them at a rate of 10% interest, compounded monthly. The amortization period of the loan is 48 months. What will be their monthly payment? What will be their total interest paid if they make an irregular payment of B$4 000 in one (1) year? Solution Using Loan Calculator: Enter B$15 000 in the Amount borrowed field. Enter today’s date for Loan Date. Enter the Renewal Date as the Loan Date plus 48 months. Enter an Interest Rate of 10% Choose Monthly for the Compounding method. Enter 48 months (or 48÷12 years) for the Amortization. For the Payment type choose the Blended payment option. Click on the Calculate button next to Payment. The payment should be B$380.44 Set the Number of Irregular Payments to 1, and click the Set button to the right. New fields will appear after loading. The Date should be one year from now. The Amount can be set to B$4 000 as indicated. Click Calculate beside the Amortization. Below there will be some amounts paid on the loan for the entire period, including Total Interest Paid. The total interest paid should be B$2 141.25 Amortization of a Mortgage Example: A B$190 000 mortgage loan is written with a 25-year amortization period, with an interest rate of 9.5% compounded monthly. To get rid of this mortgage as quickly as possible, you suggest to your client they simply index their payments by 5% each year. What is the amount of the monthly payment? What is the interest paid for both scenarios? Solution Using Loan Calculator: Enter B$190 000 in the Amount borrowed' field. Enter the current date as the Loan Date. Enter the Renewal Date as the current date plus 25 years. Enter an Interest Rate of 9.5%. Click the drop down menu under the Compounding field and choose monthly. Change the Amortization option to years using the radio button. And enter 25. Click the drop down menu under the Payment type field and choose Blended payment. Click on the Calculate button next to Payment. The monthly payment for the scenario without indexing is B$1 660.02 with B$308 007.10 in interest paid. Now set the Increase by Year field to 5%. Click Calculate beside the Amortization period, since if the clients chose to reduce their payments, interest would not decrease significantly, and we know the clients are able to make these larger payments. Notice how the interest paid has dropped dramatically. Puerto Rico Amortization of a Car Loan Example One: John’s parents decide to buy him a car so that he can more easily commute between university and home. The cost of the car is $20,000, so John’s parents pay $5,000 up front and take out a loan at a 6% interest rate from their bank to cover the remaining amount. The interest is compounded monthly over a period of 24 months. How much will their monthly payment be? Solution Using Loan Calculator: Select Loan Calculator from the Calculators drop-down menu on the Home page. Enter the principal of the loan, the cost of the car minus the parents' down-payment, in the Amount borrowed field. (See Figure 2.1) Enter the current date as the Loan Date. Enter the Renewal Date as the Loan Date plus 24 months Note: The Renewal Date does not always signify the end of the loan, but rather when the interest rate is liable to change, or for viewing the balance and interest paid by a particular date. In this case, car loans usually have fixed rates and we are interested in the entire loan. Enter an Interest Rate of 6%. Click the drop down menu under the Compounding field and choose Monthly. Type in 24 months (or 24÷12 years) for the Amortization. Click the drop-down menu under Payment Type and choose the Blended payment option. Note: "Blended payments" refer to payments made by the mortgagor that go against the interest owed and the principal of the loan simultaneously. Click on the Calculate button next to Payment. To View the amortization schedule: Click on the Schedule button at the bottom, once the results have populated, to view a payment schedule. (See Figure 2.2) Amortization of a Car Loan Example Two: Stewart and Mary decide to buy a new environmentally friendly car to replace their old 1998 van. They require a loan for $15,000 which their bank provides for them at a rate of 10% interest, compounded monthly. The amortization period of the loan is 48 months. What will be their monthly payment? What will be their total interest paid if they make an irregular payment of $4,000 in one (1) year? Solution Using Loan Calculator: Enter $15,000 in the Amount borrowed field. Enter today’s date for Loan Date. Enter the Renewal Date as the Loan Date plus 48 months. Enter an Interest Rate of 10% Choose Monthly for the Compounding method. Enter 48 months (or 48÷12 years) for the Amortization. For the Payment type choose the Blended payment option. Click on the Calculate button next to Payment. The payment should be $380.44 Set the Number of Irregular Payments to 1, and click the Set button to the right. New fields will appear after loading. The Date should be one year from now. The Amount can be set to $4,000 as indicated. Click Calculate beside the Amortization. Below there will be some amounts paid on the loan for the entire period, including Total Interest Paid. The total interest paid should be $2 141.25 Amortization of a Mortgage Example: A $200,000 mortgage loan is written with a 25-year amortization period, with an interest rate of 9.5% compounded monthly. To get rid of this mortgage as quickly as possible, you suggest to your client they simply index their payments by 5% each year. What is the amount of the monthly payment? What is the interest paid for both scenarios? Solution Using Loan Calculator: Enter $200,000 in the Amount borrowed' field. Enter the current date as the Loan Date. Enter the Renewal Date as the current date plus 25 years. Enter an Interest Rate of 9.5%. Click the drop down menu under the Compounding field and choose monthly. Change the Amortization option to years using the radio button. And enter 25. Click the drop down menu under the Payment type field and choose Blended payment. Click on the Calculate button next to Payment. The monthly payment for the scenario without indexing is $1,747.39 with $324,218.00 in interest paid. Now set the Increase by Year field to 5%. Click Calculate beside the Amortization period, since if the clients chose to reduce their payments, interest would not decrease significantly, and we know the clients are able to make these larger payments. Notice how the interest paid has dropped dramatically.

Visit the Currency Legend if you are unsure of what a currency symbol represents.

Note: Images reflect Canadian figures.

Go to the exercise to test your knowledge on Loan Calculators

Click here to return to the Financial Management Workbook.