Question

installment loan
principal $1,810
term length 3 ½ years
interest rate 12%
monthly payment $53
how much of the 31st payment will go to principal if there is an outstanding principal of $596?
interest on 31st payment = $5.96
principal on 31st payment = $?

Explanation:

Step1: Recall the relationship between monthly payment, interest, and principal payment.

The principal portion of a monthly payment is calculated as the monthly payment minus the interest portion of that payment. So, we use the formula: \( \text{Principal Payment} = \text{Monthly Payment} - \text{Interest Payment} \)

Step2: Substitute the given values.

We know the monthly payment is $53 and the interest on the 31st payment is $5.96. Substituting these values into the formula: \( 53 - 5.96 \)

Step3: Perform the subtraction.

\( 53 - 5.96 = 47.04 \)

Answer:

\( \$47.04 \)