Balance refers to the amount of the original loan that is yet to be paid.
The outstanding balance is calculated by deducting all amounts of money paid towards principal from the original principal amount.
The equation to calculate loan balance after a certain period of time is:
B = L[(1 + c)n – (1 + c)p]/[(1 + c)n – 1] where
B = Remaining loan balance
P = Monthly payment
L = Loan amount
n = Number of months
c = Monthly interest rate
It is important to note that balance does not include interest.
If the tenure remaining on a housing loan is 8 years, and a monthly installment of $500, it is wrong to assume that the balance is $96,000 ($96 x $1,000).
This is because the monthly installment payment consist of principal and interest.
The result is that the balance would be much lesser than $96,000.
for the last 36 months?
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