1. What is the Remaining Balance Formula?

The remaining balance formula calculates how much you still owe on a loan if you want to pay it off early. This is particularly useful for car loans or mortgages when considering refinancing or early payoff.

2. How Does the Calculator Work?

The calculator uses the remaining balance formula:

Where:

• \( RB \) — Remaining balance
• \( PMT \) — Monthly payment amount
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( m \) — Number of remaining payments

Explanation: The formula calculates the present value of all remaining payments at the current interest rate.

3. Importance of Early Payoff Calculation

Details: Knowing your remaining balance helps when considering refinancing, selling your car, or paying off your loan early to save on interest.

4. Using the Calculator

Tips: Enter your regular monthly payment amount, the monthly interest rate (divide APR by 12), and how many payments remain. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How do I find my monthly interest rate?
A: Divide your annual percentage rate (APR) by 12. For example, 6% APR becomes 0.06/12 = 0.005 monthly rate.

Q2: Does this account for extra payments I've made?
A: No, this assumes you've made all scheduled payments. For loans with extra payments, you'll need a more advanced calculator.

Q3: Why would I want to know my remaining balance?
A: Useful for refinancing decisions, selling your car, or determining payoff amount to save on interest.

Q4: Is this the same as my principal balance?
A: Similar concept, but this calculation gives you the exact amount needed to pay off the loan today.

Q5: Can I use this for other installment loans?
A: Yes, this formula works for any fixed-rate installment loan with regular payments.