Question

When the outstanding balance is $10,000 and a minimum payment of 6% is made, what is the total dollar amount saved by increasing the minimum payment from 3% to 6%?

approx. $400.00

approx. $2,500.00

approx. $6,500.00

approx. $15,500.00

Answer 1

Total dollar amount saved by increasing the minimum payment from 3% to 6% is approx $400.00.

When minimum payment is 3%,then

3% on $10000 = $ 300

Outstanding balance=$(10000-300)=$9700

When minimum payment increased to 6% ,then

6% on $10000=$600

Outstanding balance=$(10000-600)=$9400

So,considering the above fact total dollar amount saved

$(9700-9400)=$300

Now considering interest as 33.33% on outstanding balance further approx $100 (33.33% on 300) is saved.

Hence total dollar amount saved by increasing minimum payment from 3% to 6% is $(300+100approx.)=$400.00