I took out a “simple interest loan” at Bank of America a few years ago-no idea exactly how long ago. The initial principal was somewhere around $20K?
The loan is for twenty years, the interest rate is 8.79% and the monthly payment is $165.79. The interest rate and the monthly payment came from my latest statement. Pretty sure on the length of the loan.
Per my latest statement, last month’s payment of $165.79 broke out to $142.29 interest and $23.50 principal. The principal balance is now 19,042.01.
I would like to know the amount of the initial principle of the loan and for someone to please show me how I can determine the loan amortization.
Lot to ask, guys and gals and not the greatest of information provided to you.
This might help: follow the link and download the free spreadsheet near the top of the page (where it says “right HERE”). You’ll need Excel to run it:
The very last page (or maybe it’s the second to the last?) has a mortgage calculator. As long as you are sure of the term and the interest rate, you can guess various loan amounts until it shows you the correct payment.
That principal payment is impossible for a 20 year loan. A 25 year loan works out roughly, but I don’t see a way to arrive at the payment breakdown you gave under any circumstances, unless you’ve been paying extra.
Actualy, on a simple interest loan there is no way to determine exactly what the amortization is going to be, you can only approximate it.
This is because with a simple interest loan you pay intetest up to the effective date for which the payment is processed. For example, say the loan closes on the 10th of July and at closing you prepay interest through the 31st. Your first monthly payment is due Sept. 1st, with a 15 day grace period. If you make your first payment effective Sept. 1, your payment will first go toward paying 31 days of interest, Aug. 1-31, and the balance will go toward principal. However, suppse you pay effective Sept. 15? You are within the grace period, so there will be no late fee, but you will be paying 45 days worth of interest, from Aug. 1 through Sept. 14.
Now suppose it’s time to make the second monthly payment. You made the first payment effective Sept. 1. If you make the second payment effective October 1, you will pay 30 days of interest (30 days has September). If you pay effective the 5th, you will pay 34 days of the intetest, effective the 10th, 39 days of interest, effevtive the 21st, 40 days, of interest, effrctive Oct. 31, 60 days of interest.
This is different than a traditional mortgage, where for each month the annual interest rate is appliedto the outstanding balance, the annual interest is determined then dividex by 12, and that is the interest due for the month, no matter how many days are in the month or when the payment is received.
Back to your problem. Using my HP 12c, and assuming I’m remembering how to do this properly, a payment of $165.79 with an annual interest rate of 8.79 and a term of 20 years gives a beginning principal balance of $18,707. Using the same inputs but changing the term to 25 years gives beginning principal of $20,099. For some reason trying to solve for the term given principal of $20,000, annual rate of 8.79, and payment of $165.79 gives me an error message.
Anyway, the only ways to determine the original terms of the loan are to 1) find your copy of the note; 2) find your statements and see what the P and I breakouts were; 3) get in touch with the bank and ask.
Well, the term of the loan is about 21 more years… if the interest rate and repayment amount doesn’t change.
With the current capital reduction being $20 , there’s not much progress made each year, so the start principle must have been $19500 or something… or the inrest rate changed.
My trusty HP-12C tells me that a 20-year term, 8.79% APR, and $165.79 monthly payment means that the initial loan value was $18,706.60. That’s assuming that it’s a simple loan, no balloon payment, not an adjustable rate mortgage.
However, this data conflicts with your outstanding balance of over $19k - after a “few years” you would have reduced the initial value somewhat if you made your payments on time.
Could it have been a 25-year loan? That would correspond to a $20,100 initial value, and the current amount of $19k would make sense.
At that outstanding balance, payment amount, and interest rate, you have 21 years left on the loan. If you’ve had the loan for four years, the 25-year term makes sense.
Another possibility is a 30-year term. The initial value for this would have been $21000 (not much different!), and this would correspond to nine years since you took out the loan (assuming you’ve not been paying extra).
I got pretty much the same figures as CurtC using this online calculator. It rounded the payment up to $166, but gave a initial amount of 18 730 for a 20 year term and 20 125 for a 25 year term. As an added bonus you get a nice little graph showing just how much interest you’re going to end up paying over the lifetime of the loan…