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Amortization - Early Payoff: Robert - What will the remaining balance be on the loan after he makes the 36th payment?

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Robert recently borrowed $20,000 to purchase a new car. The car loan is fully amortized over 4 years. In other words, the loan has a fixed monthly payment, and the balance on the loan will be zero after the final monthly payment is made. The loan has a nominal interest rate of 12 percent with monthly compounding. Looking ahead, Robert thinks there is a chance that he will want to pay off the loan early, after 3 years (36 months). What will the remaining balance be on the loan after he makes the 36th payment?

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Solution Summary

The solution computed by hand using formulas.

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First calculate the EMI for the loan.
EMI = Loan amount * interest rate per period/(1-1/(1+interest rate per period)^number of payment periods))

Loan amount = 20000
Interest rate per period = 12%/12 = ...

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