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Calculate Loan Term
"JD McLeod" > wrote:
> I am trying to determine how the payment amount was calculated > (for example  it's a 3 year loan with a 15 year amortiztaion payment) You might not be able to determine that because the payment can be chosen arbitrarily. > I want to know how long it would take to pay off the loan at the > payment amount currently being charged, or in other words, the > original amortization period. Ostensibly, that is easy: just use the NPER function. Example: If the loan balance is $50,000 with monthly payments of $275 and an annual interest rate of 3.25%, the fullyamortized term of the loan is: =ROUND(NPER(3.25%/12, 275, 50,000), 0) Note: The last payment will likely be different from $275  higher or lower, depending on how the NPER result is rounded. However.... > I am trying to determine the loan term for a loan where I know > the following variables: > Loan date = 10/31/2008 > Maturity date = 09/30/2011 > Balance = $50,000 > Payment amount = $275 > Baloon at end = $20,000 > Annual IR = 3.25% Those terms do not make sense. Assuming monthly payments, the balloon payment should be: =FV(3.25%/12, 35, 275, 50000) which is about $44,883, too much different from $20,000 to be due to any kind of rounding error that I can think of. Those terms would make sense if the payment is made about every 9 days(!). Even then, the balloon payment would be about $20,679. What is the payment frequency? (Note: There is a difference between "every 2 weeks" and "semimonthly". Be precise.) I am suspicious of the term of the loan. 10/31/2008 to 9/30/2011 is 35 months. I suspect it should be 36 months; so either the "loan date" should be 9/30/2008, or the "maturity date" should be 10/31/2011. Also, the "balance" might be the current balance, not the amount of the initial loan on the "loan date". Ring any bells? It would be helpful if you posted "exact" numbers: dollar amounts to the dollar, if not to the cent, and interest rates to the actual precision (4 decimal places of the percentage is very common).  original message  "JD McLeod" > wrote in message ... > I am trying to determine the loan term for a loan where I know the following > variables: > Loan date = 10/31/2008 > Maturity date = 09/30/2011 > Balance = $50,000 > Payment amount = $275 > Baloon at end = $20,000 > Annual IR = 3.25% > I have several loans I am looking at where the payment amount is not enough > to pay off the loan at maturity, in other words, there will be a balance due > at maturity (balloon). I want to know how long it would take to pay off the > loan at the payment amount currently being charged, or in other words, the > original amortization period. I am trying to determine how the payment > amount was calculated (for example  it's a 3 year loan with a 15 year > amortiztaion payment) > Thanks. 
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