Amortization calculation

[WorkHorse]

How can I determine a payment amount for a delinquent loan. Say the principal is $1000 with simple annual rate of 7%, plus there is back interest of say $400. The interest accrues on the principal at 7% (not compunded) each month. Payments go to back interest before any payments start going to principal. How can I calculate what the monthly payment amount should be to pay the loan in X number of months?

[prog_tom]

My English reading skills aren't all that great understanding the question, but here's my guess:

[WorkHorse]

Sorry. That's not even close.

[snakeeyes1000]

p = rmp + ib + p

m=month, ib=initial back interest, p=initial principal, r = interest rate

[WorkHorse]

I'm not sure I understand your formula:

p = rmp + ib + p

m=month, ib=initial back interest, p=initial principal, r = interest rate

p = 1000 (Principal)
ib = 400 (Back interest)
r = .07 (Interest rate)
m = 24 (Months for repayment)

rmp + ib + p = X

rmp = .07 * 24 * 1000 = 1680
+ ib = 2080
+ p = 3080

What is $3080.00?

Keep in mind that the idea is that there are accounts with very little interest and accounts with very large back interest. The formula has to be based on simple interest amortization but also account for payments to principal not kicking in until back interest is paid.

My Excel spreadsheet shows the result should be about $47 per month. But I don't know how to do the calculation. I forgot how do do math when I learned Excel. Please help!

[opus]

Did I get it right ?
The totla Credit was 1000
The annual interestrate is 7%
What is a "backinterest"?, the monthly payment (including interest) to payback the credit?
Assumung that is so:

The formula to compute the remaining credit after any month is:
Credit= (Credit* 7%/12)-400

Do that until Credit is less than 0. I know it'S an iterative way, but EXCEL is fast enough to do that.

[WorkHorse]

Let me try to explain. The number I'm looking for is the amount of the monthly payment. Here's an eample.

Joe borrows $1500.00. Interest rate is 7% annual, calculated each month. Loan must be repaid in 5 years. So we calculate Joe's monthly payment to pay the debt in 5 years. Joe makes payments and reduces the principal to $1000.00. He loses his job and stops making payments. While Joe isn't making payments interest still accrues each month ($1000 & .07 / 12 per month). So after 2 years Joe still owes $1000 principal, plus $200 in unpaid interest that accrued while he wasn't making payments. That $200 is the back interest. Joe gets a good job and wants get the debt paid. He has 3 years left to pay the debt. How much would Joe have to pay each month to pay the debt in the remaining 3 years?

If the payment amount comes out to, say, $50, the first 4 payments would pay off the $200 back interest. During that time, interest still accrues on the $1000 ($1000 & .07 / 12 per month). So the 5th payment would go toward the interest that accrued during the last 5 months when nothing was being paid on interest. Once the interest gets paid down, then payments start going to principal + monthly interest like a regular loan. So how do I calculate Joe's monthly payment? (I need to code it. I'm only using Excel to check the code.)

Thank you.

[opus]

Now I do understand!
To start with, your "back interset" is nothing else than a part of the actual "owed amount".
Put it that way, if you get a loan of 1000 for one year, after that year you do owe the bank 1000 plus the interest (if you didn't pay back anything).

"Normally" the yearly or monthly amount to pay back is calculated as a percentage of the original credit. That way you pay the same amount each time (nearly), but the actual interest you have to pay each period is decreasing. But the amount is never the same all the time, either you have a different first or last amount.

I don't think that their is an exact formula to calculate the amount direct. My best guess is:

Creditamount*0,55*(InterestRate/12)+Creditamount/Paymentperiods

I used 0,55 just because 0,5 wasn't enough.

[opus]

A bit more thinking and I got a formula:


Amount to pay = Creditamount*( ( 1+Interest)^Periods)/( (1+Interest)^0 +(1+Interest)^1 .....(1+Interest)^Periods-1)


With (1+Interest) would be in your example 1 +0,07/12
Sorry for the bad writing, but I don't know how to do the Summ symbol!

[Spooner]

Mathworld has a whole section on business math