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Installment buying (MATH)











































Question: A $400 loan is to be paid off in 66 monthly payments of $11.62. The borrower decides to pay off the loan after 18 payments. Use the rule of 78s to find the amount of interest saved.

66 payments of 11.62 = $766.92
Finance charge = $766.92 - 400 = 366.92

Cumulative month-interest charges for 66 months
= 66*67/2 = 2211
Cumulative month-interest charges left to be paid after 18 months (66-18=48 months)
= 48*49/2 = 1176
Interest charges saved
= 1176/2211 * 366.92
= $195.16

Answer: $195.16

Comments for Installment buying (MATH)

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Sep 26, 2011
Installment Buying - Rule of 78s
by: Staff

The question:

Question: A $400 loan is to be paid off in 66 monthly payments of $11.62. The borrower decides to pay off the loan after 18 payments. Use the rule of 78s to find the amount of interest saved.

66 payments of 11.62 = $766.92
Finance charge = $766.92 - 400 = 366.92

Cumulative month-interest charges for 66 months
= 66*67/2 = 2211
Cumulative month-interest charges left to be paid after 18 months (66-18=48 months)
= 48*49/2 = 1176
Interest charges saved
= 1176/2211 * 366.92
= $195.16

Answer: $195.16


The answer:



I have found a good answer to your question in our archives.


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www.solving-math-problems.com



Sep 25, 2014
Installment interest NEW
by: Janet

This is a fantastic site and one I will continue to use. I am in an on- line school and am working
on a Business Administration Degree and this site will come in handy. Thank you!

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