I used a loan calculating spreadsheet or using website to figure it out.
it calculated $106.62 as the scheduled payments with total interest paid in the life of the loan being $79.42.
Why? interest should be 144.00?
Aloan $1,200 for 12% for 1 year , interest should be 144.00?
- Posted:
- 3+ months ago by bc99
- Topics:
- figure, year, year s, interest, loans, website, years, payment
Details:
Responses (1)
It all comes down to the type of compounding, and whether you're paying anything per month. You're correct, if you borrow the $1200 for 1 year without any payments, then at the end of the year you pay back the $1200 and the 12% interest, then you'd be paying back 1200 + 144. On the other hand, if you're making principal and interest payments each month so that you have no balloon payment at the end of the year, then it's called fully amortized, and there's an ugly formula that figures things out, taking compounding (usually monthly) into account.