Question
Ishtaq has applied for a loan for 250,000 dirhams to buy a 350,000 dirham car, so he made a down payment of 100,000 dirhams. The
Ishtaq has applied for a loan for 250,000 dirhams to buy a 350,000 dirham car, so he made a down payment of 100,000 dirhams. The interest rate for a conventional fixed-rate, fixed-term, amortizing loan is 3% per year. He takes the loan for 5 years (60 months) and will make equal monthly payments for 60 months. He now wishes to pay off the loan after 3 years (36 months), but now he finds out there is a 4% prepayment penalty on the outstanding loan balance. Nevertheless, he decides to pay off the loan. How much does he have to pay(to the nearest fil) to the bank to close out the loan including payment of loan balance and prepayment penalty?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started