Question

What is the loan balance (in dollars) after the third payment, of a 5 year loan of $100,000 with an APR of 10% and annual payments?

Answer 1

Loan Amount = $100,000

Firstly calculating the annual payments towards the loan amount:-

Where, P = Loan Amount = $100,000

r = Periodic Interest rate = 10%

n= no of periods = 5

Annual Payments = $26,379.75

So, yearly payments towards looan is $26,379.75

Now, Calculating the Loan Balance after 3rd payment using loan amortization schedule:-

Year	Beg bal.	Payment	Interest amount	Principal Amount	End Bal.
1	100,000.00	26,379.75	10,000.00	16,379.75	83,620.25
2	83,620.25	26,379.75	8,362.03	18,017.73	65,602.53
3	65,602.53	26,379.75	6,560.25	19,819.50	45,783.03

Note- The following Columns are calculated based on:

- Interest amount = beg. Balnace*Monthly interest rate

- Principal Amount = Payment - Interest amount

- End Bal. = Beg. Bal + Interest - Payment

So, Loan Balance in dollar terms after 3rd payment is $45,783.03

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