L39) Interest Volume plus Multi-tasking Dollars Example

Interest Volume plus Multi-tasking Dollars Example

As time goes by I will be adding to this scenario as this person uses saved dollars to pay for their premiums and then takes loans to reuse those premium dollars by making principle only lump sum payments to their vehicle loan while tracking the effect of doing that on the overall interest rate and volume as time goes by.

So come back every few months for a review. Feel free to comment below also.

First off, do you ever check that the loan you are being given is what you were told you would be given? Do you ever check the math. The numbers of the loan below just do not match what this person was told or the numbers on the contract.

 The interest rate is meant to be 6.49% according to the online statement. However, if they were actually being charged 6.49% their monthly repayment would be $417.85. They are actually being charged a monthly payment of $418.97. This person needs to look into this discrepancy

The following is the amortization schedule using the interest rate the person was told would be his interest rate but the monthly payment does not match if this is so.

Notice below that after just two monthly payments the amount of principal owing on the billing statement (outstanding balance – $20,798.96) is $44.25 more than what it should be after two monthly payments on the amortization schedule (balance owing -$20,754.71); even though only 2 x $1.28 = $2.56 is the difference in the monthly payment amount.

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AMORTIZATION Schedule

Month / Year Payment Principal 
Paid
Interest 
Paid
Total  
Interest
Balance
July 2013 $417.85 $302.33 $115.53 $115.53 $21,058.67
Aug. 2013 $417.85 $303.96 $113.89 $229.42 $20,754.71
Sept. 2013 $417.85 $305.60 $112.25 $341.67 $20,449.11
Oct. 2013 $417.85 $307.26 $110.60 $452.26 $20,141.85
Nov. 2013 $417.85 $308.92 $108.93 $561.20 $19,832.94
Dec. 2013 $417.85 $310.59 $107.26 $668.46 $19,522.35
Jan. 2014 $417.85 $312.27 $105.58 $774.04 $19,210.08
Feb. 2014 $417.85 $313.96 $103.89 $877.94 $18,896.12
Mar. 2014 $417.85 $315.66 $102.20 $980.14 $18,580.46
April 2014 $417.85 $317.36 $100.49 $1,080.62 $18,263.10
May 2014 $417.85 $319.08 $98.77 $1,179.40 $17,944.02
June 2014 $417.85 $320.81 $97.05 $1,276.44 $17,623.22
July 2014 $417.85 $322.54 $95.31 $1,371.76 $17,300.68
Aug. 2014 $417.85 $324.28 $93.57 $1,465.32 $16,976.39
Sept. 2014 $417.85 $326.04 $91.81 $1,557.14 $16,650.35
Oct. 2014 $417.85 $327.80 $90.05 $1,647.19 $16,322.55
Nov. 2014 $417.85 $329.57 $88.28 $1,735.47 $15,992.98
Dec. 2014 $417.85 $331.36 $86.50 $1,821.96 $15,661.62
Jan. 2015 $417.85 $333.15 $84.70 $1,906.67 $15,328.47
Feb. 2015 $417.85 $334.95 $82.90 $1,989.57 $14,993.52
Mar. 2015 $417.85 $336.76 $81.09 $2,070.66 $14,656.76
April 2015 $417.85 $338.58 $79.27 $2,149.93 $14,318.17
May 2015 $417.85 $340.41 $77.44 $2,227.36 $13,977.76
June 2015 $417.85 $342.26 $75.60 $2,302.96 $13,635.50
July 2015 $417.85 $344.11 $73.75 $2,376.70 $13,291.39
Aug. 2015 $417.85 $345.97 $71.88 $2,448.59 $12,945.43
Sept. 2015 $417.85 $347.84 $70.01 $2,518.60 $12,597.59
Oct. 2015 $417.85 $349.72 $68.13 $2,586.73 $12,247.87
Nov. 2015 $417.85 $351.61 $66.24 $2,652.97 $11,896.25
Dec. 2015 $417.85 $353.51 $64.34 $2,717.31 $11,542.74
Jan. 2016 $417.85 $355.43 $62.43 $2,779.74 $11,187.31
Feb. 2016 $417.85 $357.35 $60.50 $2,840.25 $10,829.97
Mar. 2016 $417.85 $359.28 $58.57 $2,898.82 $10,470.69
April 2016 $417.85 $361.22 $56.63 $2,955.45 $10,109.46
May 2016 $417.85 $363.18 $54.68 $3,010.12 $9,746.29
June 2016 $417.85 $365.14 $52.71 $3,062.83 $9,381.14
July 2016 $417.85 $367.12 $50.74 $3,113.57 $9,014.03
Aug. 2016 $417.85 $369.10 $48.75 $3,162.32 $8,644.93
Sept. 2016 $417.85 $371.10 $46.75 $3,209.07 $8,273.83
Oct. 2016 $417.85 $373.10 $44.75 $3,253.82 $7,900.72
Nov. 2016 $417.85 $375.12 $42.73 $3,296.55 $7,525.60
Dec. 2016 $417.85 $377.15 $40.70 $3,337.25 $7,148.45
Jan. 2017 $417.85 $379.19 $38.66 $3,375.91 $6,769.26
Feb. 2017 $417.85 $381.24 $36.61 $3,412.52 $6,388.02
Mar. 2017 $417.85 $383.30 $34.55 $3,447.07 $6,004.71
April 2017 $417.85 $385.38 $32.48 $3,479.55 $5,619.34
May 2017 $417.85 $387.46 $30.39 $3,509.94 $5,231.88
June 2017 $417.85 $389.56 $28.30 $3,538.24 $4,842.32
July 2017 $417.85 $391.66 $26.19 $3,564.42 $4,450.65
Aug. 2017 $417.85 $393.78 $24.07 $3,588.50 $4,056.87
Sept. 2017 $417.85 $395.91 $21.94 $3,610.44 $3,660.96
Oct. 2017 $417.85 $398.05 $19.80 $3,630.24 $3,262.91
Nov. 2017 $417.85 $400.21 $17.65 $3,647.88 $2,862.70
Dec. 2017 $417.85 $402.37 $15.48 $3,663.37 $2,460.33
Jan. 2018 $417.85 $404.55 $13.31 $3,676.67 $2,055.79
Feb. 2018 $417.85 $406.73 $11.12 $3,687.79 $1,649.05
Mar. 2018 $417.85 $408.93 $8.92 $3,696.71 $1,240.12
April  2018 $417.85 $411.15 $6.71 $3,703.42 $828.97
May 2018 $417.85 $413.37 $4.48 $3,707.90 $415.60
June 2018 $417.85 $415.60 $2.25 $3,710.15 $0.00

 

Below is the amortization schedule for the full 5 years with the correct monthly payment that this person is actually being charged. The interest rate is actually higher than what he is being quoted though, to get this monthly payment. Will have to look into why that is. We will use this $418.97 though to compare the monthly payment distribution between principal and interest over time.

Also notice below that the percentage of interest charged, $117.52 of the total payment of $418.97 is actually 28.04%.

Month two’s interest payment of $115.86 is 27.65% of the $418.97 monthly payment.

Month three’s interest payment of $114.19 is 27.25% of the 418.97 monthly payment. Actually, three payments were made during September, not just one. 3 x 418.97 = $1,256.91. So $114.19 is 9.08% only.

Or we could say that for the fourth monthly payment (October) because the interest will be $106.08, that is a little more than the amount of interest showing for the Feb 2014 monthly payment distribution.

So haven’t we just jumped 3 1/2 months down to between Jan and Feb’s interest payment amount ($106.08) for our October payment and saved ourselves over $220.00 of interest payments?

Saved ourselves if we were paying Toyota financing company that is, like these people. But what if we owned that financing company?

 Amortization  table for $21,361.00 borrowed on Jun 12, 2013 for 5 years (60 months) at 6.602%

Month  / Year Payment Principal   Paid Interest   Paid Total    Interest Balance
July  2013 $418.97 $301.45 $117.52 $117.52 $21,059.55
Aug.  2013 $418.97 $303.11 $115.86 $233.38 $20,756.44
Sept.  2013 $418.97 $304.78 $114.19 $347.58 $20,451.66
Oct.  2013 $418.97 $306.46 $112.52 $460.10 $20,145.20
Nov.  2013 $418.97 $308.14 $110.83 $570.93 $19,837.06
Dec.  2013 $418.97 $309.84 $109.14 $680.07 $19,527.22
Jan.  2014 $418.97 $311.54 $107.43 $787.50 $19,215.68
Feb.  2014 $418.97 $313.26 $105.72 $893.22 $18,902.43
Mar.  2014 $418.97 $314.98 $103.99 $997.21 $18,587.45
April  2014 $418.97 $316.71 $102.26 $1,099.47 $18,270.74
May  2014 $418.97 $318.45 $100.52 $1,199.99 $17,952.28
June  2014 $418.97 $320.21 $98.77 $1,298.76 $17,632.07
July  2014 $418.97 $321.97 $97.01 $1,395.77 $17,310.11
Aug.  2014 $418.97 $323.74 $95.23 $1,491.00 $16,986.37
Sept.  2014 $418.97 $325.52 $93.45 $1,584.45 $16,660.85
Oct.  2014 $418.97 $327.31 $91.66 $1,676.12 $16,333.54
Nov.  2014 $418.97 $329.11 $89.86 $1,765.98 $16,004.42
Dec.  2014 $418.97 $330.92 $88.05 $1,854.03 $15,673.50
Jan.  2015 $418.97 $332.74 $86.23 $1,940.26 $15,340.76
Feb.  2015 $418.97 $334.57 $84.40 $2,024.66 $15,006.18
Mar.  2015 $418.97 $336.41 $82.56 $2,107.22 $14,669.77
April  2015 $418.97 $338.27 $80.71 $2,187.93 $14,331.50
May  2015 $418.97 $340.13 $78.85 $2,266.77 $13,991.38
June  2015 $418.97 $342.00 $76.98 $2,343.75 $13,649.38
July  2015 $418.97 $343.88 $75.09 $2,418.84 $13,305.50
Aug.  2015 $418.97 $345.77 $73.20 $2,492.05 $12,959.73
Sept.  2015 $418.97 $347.67 $71.30 $2,563.35 $12,612.05
Oct.  2015 $418.97 $349.59 $69.39 $2,632.73 $12,262.47
Nov.  2015 $418.97 $351.51 $67.46 $2,700.20 $11,910.96
Dec.  2015 $418.97 $353.44 $65.53 $2,765.73 $11,557.51
Jan.  2016 $418.97 $355.39 $63.59 $2,829.31 $11,202.13
Feb.  2016 $418.97 $357.34 $61.63 $2,890.94 $10,844.78
Mar.  2016 $418.97 $359.31 $59.66 $2,950.61 $10,485.47
April  2016 $418.97 $361.29 $57.69 $3,008.30 $10,124.19
May  2016 $418.97 $363.27 $55.70 $3,064.00 $9,760.91
June  2016 $418.97 $365.27 $53.70 $3,117.70 $9,395.64
July  2016 $418.97 $367.28 $51.69 $3,169.39 $9,028.36
Aug.  2016 $418.97 $369.30 $49.67 $3,219.06 $8,659.05
Sept.  2016 $418.97 $371.33 $47.64 $3,266.70 $8,287.72
Oct.  2016 $418.97 $373.38 $45.60 $3,312.29 $7,914.34
Nov.  2016 $418.97 $375.43 $43.54 $3,355.84 $7,538.91
Dec.  2016 $418.97 $377.50 $41.48 $3,397.31 $7,161.41
Jan.  2017 $418.97 $379.57 $39.40 $3,436.71 $6,781.84
Feb.  2017 $418.97 $381.66 $37.31 $3,474.02 $6,400.18
Mar.  2017 $418.97 $383.76 $35.21 $3,509.24 $6,016.41
April  2017 $418.97 $385.87 $33.10 $3,542.34 $5,630.54
May  2017 $418.97 $388.00 $30.98 $3,573.31 $5,242.55
June  2017 $418.97 $390.13 $28.84 $3,602.16 $4,852.41
July  2017 $418.97 $392.28 $26.70 $3,628.85 $4,460.14
Aug.  2017 $418.97 $394.44 $24.54 $3,653.39 $4,065.70
Sept.  2017 $418.97 $396.61 $22.37 $3,675.76 $3,669.10
Oct.  2017 $418.97 $398.79 $20.19 $3,695.95 $3,270.31
Nov.  2017 $418.97 $400.98 $17.99 $3,713.94 $2,869.33
Dec.  2017 $418.97 $403.19 $15.79 $3,729.72 $2,466.14
Jan.  2018 $418.97 $405.41 $13.57 $3,743.29 $2,060.73
Feb.  2018 $418.97 $407.64 $11.34 $3,754.63 $1,653.10
Mar.  2018 $418.97 $409.88 $9.09 $3,763.72 $1,243.22
April  2018 $418.97 $412.13 $6.84 $3,770.56 $831.08
May  2018 $418.97 $414.40 $4.57 $3,775.14 $416.68
June  2018 $418.97 $416.68 $2.29 $3,777.43 $0.00
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June 27, 2013 · Jennifer · No Comments
Tags: , , , , ,  · Posted in: CLIENT LESSONS, L39) Interest Volume

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