Question

A buyer took out a $6,000 loan for 10 years at 10.5% interest. The buyer made principal payments of $75 a month on the loan in addition to interest. What would be the principal loan balance after 6 months of payments?

Answer 1

$5,550

Step-by-step explanation:

Given:

Principle amount of the loan = $6,000

Duration of the loan = 10 years

Rate of interest = 10.5%

Principle payment made each month = $75

Now,

The total principle amount paid in six months

= Principle payment made each month × 6 months

= $75 × 6

= $450

Now,

the principle amount payment is made on addition to the interest, therefore no interest will be due after 6 months

Hence,

the principle loan balance

= Principle loan amount initially - Total principle paid

= $6,000 - $450

= $5,550