17BII, 27S: doing TVM calculations inside solver equations

[Dave Britten]

(05-01-2019 02:28 PM)Csaba Tizedes Wrote:  Two notes to this:

1. This is total same what I programmed approx 2 months before on my 12C, except your point 3.), because:
2. In Hungary if you change the number of periods (which is written in your contract) you must to make a new contract (contract modification) - but you have a possibility to pay principal as prepayment. This will reduce your PV but not your N. Of course, your PMT also reduced.
   

Therefore in real life the good solution to calculate the required periods to reduce the PV below your monthly payment, and then you can pay the whole PV.
So, you need to make a table: 1st Coloumn: Your prepayment (eg. in every 6 periods or every 12 periods), 2nd Coloumn: The required N for reducing PV<=PMT

With this table you can easily decide what is the preferred prepayment or N for you.

Csaba

Sounds like loans are handled a bit differently between Hungary and the US, then. Whenever I make an extra principal-only payment (which I've done a couple of times), the outstanding balance is directly reduced, but the payment amount doesn't change. This means that the loan will be paid in full sooner, and thus collect less total interest.

When I did this for my mortgage, I had the option of having the loan reamortized to the same length, which would have lowered the monthly payment, but would not have reduced the total interest paid by as much as leaving the payment amount at its original higher value, and settling the loan earlier.