Question

Marisol has a loan that she used for vision correction surgery. she originally borrowed 3,680 at an annual interest rate of 8.45 percent for three years. marisol’s monthly payment are 286.00. with five remaining payments her principal balance is 568.35 and she wants to pay the balance of the loan. calculate an estimate of marisol’s early payoff amount

Answer 1

The estimated early payoff amount for Marisol's loan is -$841.35, indicating that she has overpaid and is eligible for a refund.

Step-by-step explanation:

To calculate an estimate of Marisol's early payoff amount, we need to find the remaining principal balance after five payments and then add any remaining interest.

Step 1: Find the remaining principal balance after five payments:

Remaining principal balance = Principal balance - (Monthly payment * Number of remaining payments)

= $568.35 - ($286.00 * 5)

= $568.35 - $1430

= -$861.65 (negative indicates an overpayment)

Step 2: Calculate any remaining interest:

Remaining interest = Principal balance * Annual interest rate * Remaining time (in years)

= $568.35 * 0.0845 * (5/12)

= $20.30

Step 3: Estimate early payoff amount:

Early payoff amount = Remaining principal balance + Remaining interest

= -$861.65 + $20.30

= -$841.35

Since the estimated early payoff amount is negative, it indicates that Marisol has overpaid her loan and will receive a refund of $841.35.